We look at two online personal financial management tools, 22seven and moneysmart, to discover how tracking your spending can save you money.

Recently launched 22seven aims to identify spending habits and behaviour to limit unneccessary expenditure."The most fundamental difference between 22seven and traditional personal financial management tools is that it accepts, and even celebrates, that we are human," says Christo Davel, CEO of 22seven. “22seven is founded on the idea that if we become more aware of why we make the decisions we do, we'll be in a better position to make smarter money choices. By using behavioural economics as the departure point, 22seven is able to guide you towards a better understanding of how you work with money and how to do more with what you have."

Understanding spending behaviour
Davel identifies five ways in which our humanness affects how we spend and save:

1. Instant gratification: We are hardwired for this. It's the drive that tempts us into buying that Rolex watch today instead of putting money away for the holiday we want at the end of the year.

2. Keeping up with the Joneses: We have a herd mentality. We end up driving cars we can’t really afford and prioritising flatscreen TVs over other purchases because it's what everyone else has.

3. Loss aversion: Fear of loss is a far greater motivator than the joy of gain. We see this every day – we hang on to stocks while the JSE plummets, stay in jobs that aren’t that great and invest more money into fixing broken computers.

4. Mental accounting: We make snap judgments about most things. When we do it with money, the results are interesting. For example, most of us would drive to another shop for a R1 000 saving on a laptop. But very few of us would do the same for a R1 000 saving on a new car.

5. Pain of paying: Ever noticed how much easier it is to put something on your credit or store card than pay cash? Distancing the actual experience of paying from the buying reduces the pain of paying.

"22seven is a chance for you to see how you are working with your money," says Davel. "Unfortunately, there is no silver bullet, but as you become aware of how your default decision making affects your financial life, you can start to become more mindful and, therefore, more in control of your money".

Visit www.22seven.com for more information.

"Both free and safe, the moneysmart engine enables people with regular bank accounts, home loans, credit cards, store cards, finance and personal loans to upload their information and get a comprehensive savings solution," says moneysmart CEO, Tobie van Zyl. "moneysmart is intelligent. Based on a set of algorithms, we can determine what your highest, average and lowest spend per budget category is".

Savings tips
Van Zyl offers five tips for saving money based on the data provided by the moneysmart site.

1. Budget by what you spend, not by what you earn
By separating your priorities, necessities and luxuries, you will be able to better distinguish your real needs. You can personalise them with tags and create rules for each budget category on moneysmart.

2. Your budget is not a target
When a budget becomes a target, you think of spending it all, but if it becomes an investment, then you will reassess its potential. You have to find a balance in your budget by spreading your earnings evenly, so you are able to see what categories have the least spend by the 15th and move the remaining money to categories that require more.

3. Pay yourself by investing
A good way to make room for this is to allocate 15% of your net pay to a goal. Invest that money in an interest-bearing account or small investment product where you have quick access to your cash when needed.

4. Track your money
By not seeing where your money goes, you will end up at a dead end. It's important to get an accurate forecast on your average spend over time. You can achieve this by looking back at your last three months' spend.

5. Review hidden costs
moneysmart is great for analysing fees and charges from your bank account, and even those swipes and ATM withdrawals.

Visit https://moneysmart.co.za/ for more information.