In light of this, the recent news that 753 of the “Inbetweener...
How does Monzo work and is it any good?
Using your phone to manage your money is pretty much the norm these days. In fact, according to UK Finance, nearly 22 million people in the UK regularly used banking apps during 2017. This was a 12 per cent rise on the previous year, and there’s no sign of the trend slowing down yet.
As there are so many banking and money-saving apps to choose from, let’s take a look on one of the most popular around – Monzo.
Founded in 2015, Monzo describes itself as a bank that ‘lives on your smartphone and (is) built for the way you live today’. But what does that actually mean?
Intrigued, I downloaded the app. Here’s how I got on…
First, a history lesson…
So Monzo – formally Mondo – started out as a prepaid credit card. It offered users the opportunity to “fully control their finances”. They could top the card up whenever they liked and have full access to their spending.
What’s more, the app would send regular updates on their spending to their phone. It would also include daily round-ups of their spending activity.
So what is Monzo today?
There are many that feel that Monzo is a major challenger to how things have ‘always been done’ in the banking sector. Honestly? I’d have to agree!
Monzo is a truly digital product. It has no physical branch network and is fully managed within an app that you control. This may be a downside for you if you prefer to have a local branch you can pop in to, but I actually can’t remember the last time I visited a bank so this doesn’t really bother me.
You can still get instant access to your money with no risk of overspending (you can on occasion go into a negative balance but you won’t be charged for this – this is rare). You can have your salary paid in, you can set regular direct debits and standing orders and they’re now exploring lending products and ISA’s.
They’ve also built in a system that isolates all of the money that’s needed for your pending transactions, to help you avoid going overdrawn.
What I love most is being able to drill down on my spending patterns. This can be done across several major categories (e.g. Shopping, Groceries, Food and Drink) – the app can even categorise unknown spending to further improve the data it collects for you. It wants to be as useful and helpful to you as possible, which is kinda nice if you think about it!
It’s understandable if you’re feeling a bit skeptical about the whole phone banking craze, but fret not. Monzo are fully authorised and regulated by both the FCA and Prudential Conduct Authority so if you do switch to it as your main banking platform, your money’s safe (up to £85,000).
For what it’s worth, I’m yet to fully commit to my salary to Monzo, but I do transfer my disposable income to it so I can use it for sundries throughout the month.
It’s worth mentioning as well that this card can be used globally, so you shouldn’t have to give your bank a heads-up if you go away on a trip somewhere. Monzo also claims to be cheaper than traditional cards when used abroad.
How Monzo can help you with budgeting
Monzo allows you to look at your spending across a timeline. This can be viewed either as :
- Itemised spending over a day
- Cycling through to previous dates for an overview of your spending on a given day.
Unlike digital banking apps, there are no statements with Monzo. You can download your spending as a spreadsheet if you want. I can’t say I’ve ever been tempted, personally, but the option’s there if you’re feeling particularly nerdy about your spending habits.
A newer feature that I really like is the spending limits function. Monzo allows you to set caps on your monthly budget. You can even set specific category budgets restricting you from overspending on clothes for example. This really helps me be mindful of what I spend my money on – It can however leave you feeling red faced at the front of the queue at Topshop when your card’s declined.
Using Monzo to build up a savings pot
The app creates ‘savings pots’ that are separate from your general funds. There’s no limit to the number of pots you can have, and you can either set Monzo to automatically take money as you spend, or set up specific dates or frequencies. I’ve set up my Monzo to round up a small deposit to the nearest pound and add it into a savings pot every time I buy something; this saves me around £1 per day. I often forget and find this pot towards the end of the month – it can be a real lifesaver!
How does Monzo work with my phone?
Monzo lines up nicely with all the major mobile payment providers such as Apple Pay, Samsung Pay and G-pay. The card works the same way as a MasterCard.
So in summary, I’m a fan. Do you think you might be, too? Why not give it a try? It’s free!