How to Build a Budgeting App: Opportunities, Challenges, and Practical Tips

Between 2020 and 2021, the proportion of U.S. consumers using fintech apps grew from 58% to 88%. As financial service mobile apps become increasingly popular, an average smartphone user has 2.5 personal finance or budgeting apps on their device. The demand is very high, and launching such a product might be an excellent option for a startup. Apart from the demand, a personal finance app brings great opportunities for collaborations with financial institutions, integrations with top-notch fintech software, and development of new payment solutions. Potentially, a simple budgeting app can grow into a complex financial software development project.

But let’s not get ahead of ourselves. For now, let’s dive into the topic of budgeting and personal finance apps. We’ll explore why they are so popular, the challenges in developing these solutions, successful examples, key features, and tips for launching a budgeting application.

To start off, let’s discuss the main promises of personal finance app development. A startup launching such an application can leverage several opportunities and benefits that are outlined below.  

Budgeting apps are already popular, but their user base still keeps growing. In particular, it is estimated that the demand for budgeting apps will grow at a CAGR of 5.4% until 2032, reaching USD 359.01 million. More and more users aim to have an opportunity to manage their spending, incomes, investments, and other financial operations from a smartphone. For startup founders, this means great possibilities for taking particular niches in the market. For example, apps oriented on the representatives of specific professions or embracing a variety of user groups, such as business owners, regular users, senior citizens, and even kids.

While building a personal finance app with a flexible architecture, such as microservices, you unlock boundless integration opportunities. With a diversity of free APIs, you can easily expand your app into a full-fledged fintech ecosystem integrated with various payment solutions, transaction tracking software, and digital banking apps. Over time, you can grow a simple budgeting app into a complex fintech system that operates globally.

A fintech solution in demand can be easily monetized with various subscription models. Some possible subscription models include:

• Free tier with very basic functionality
• Pay-as-you-go tier with one-time payments for specific features or reports
• Premium tier that expands the features of a free tier with custom goal-setting functionality, advanced budgeting tools, and an ad-free experience
• Family plan that provides features from the premium tier to multiple user accounts and introduces additional features, such as the control over children’s budget
• Professional tier that expands the features of a premium tier with professional functionality, such as documentation preparation, investment portfolio management and tracking, etc.
• Enterprise tier with the functionality of the professional tier, multi-user access, and enterprise-level features, such as business expense tracking and in-depth financial analytics.

With a diversity of subscription models, you will cover different user groups and ensure recurring revenue streams, making your venture profitable.

A budgeting app offers you a great range of partnership opportunities. You can collaborate with financial institutions, such as banks and credit card companies. This will not only improve the experience your app provides to the users but also help you expand your network and your product’s market visibility. Personal financial software also offers possibilities for productive collaboration with businesses from different industries, such as educational platforms providing financial literacy resources, investment solutions, and financial advisory services. This allows you to reach a much broader user audience by offering a comprehensive suite of financial tools and benefits.

Budgeting app development is a great idea for startups. However, just like any promising venture, it has certain challenges to consider. Be sure to take them into account, as well as focus on risk mitigation strategies that will help you efficiently deal with these challenges

Budgeting apps interact with payment systems, loads of private information, and personal user accounts. These are the sensitive points that can be potentially exposed to malware and security breaches. In such conditions, ensuring top-notch application safety is of paramount importance for the developers of personal finance management tools. This can be achieved through integrations with fintech security solutions, complex data encryption algorithms, zero-trust network access policies, DNS filtering, secure web access gateway integration, and cloud-based security measures, such as Azure’s Key Vault.

The fintech domain is governed by a diversity of regulations, such as Payment Card Industry Data Security Standards (PCI DSS), FINRA standards, etc. While developing a solution that should comply with all these regulations, you should be extremely attentive to detail. Run compliance checks, consult with industry specialists, and research all relevant legal matters and industry standards to avoid unexpected issues. Also, be attentive to detail while expanding your operations internationally. Different countries may have distinctive fintech requirements. Your task is to identify regulations relevant to your solution and ensure compliance with them.

Over time, you may start expanding your budget app internationally. This is a very promising idea because international outreach increases the apps’ user bases and market visibility dramatically. However, you should be prepared for the fact that different markets may have different requirements and trends. That’s when the flexibility of your app’s architecture matters most. Get prepared for the integrations with different payment gateways, research and comply with distinctive industry standards, and analyze trends of different markets to be ready for international expansion.

The competition in the fintech startup market is fierce, and there are already popular and successful personal finance apps. To be competitive, you should take a unique niche or provide unique value to your customers. Fortunately, there are always opportunities for covering particular user groups or providing unique integrations that will help your product stand out. For example, you can build a budgeting app with a unique feature set oriented toward investors, probably, even from a specific industry, such as real estate. There are many interesting niches, but you will need to run thorough market research to find the most promising directions and opportunities in the domain of budgeting apps.

To stand out from the competition, you should provide unique value to your users. This will allow you to leverage many benefits associated with fintech market trends outlined below. 

Being competitive in this domain means introducing unique features that will offer exceptional value to your target audience. However,  there are also certain features that should be introduced in any or almost any budgeting application. Let’s discuss them in more detail.

The main aim of any budgeting app is to help a user stay on top of their finances. A quality tool for financial tracking helps users control and understand all their expenses. Analytics and statistics provide deeper insights into this topic, creating a foundation for budget-saving strategies. Improved tracking of expenses is essential for efficient budget forecasting and cost management on different levels, ranging from businesses to regular individuals.

Quality tools for budget planning are also essential for efficient finance management. A user can set budgets for different activities, whether it goes about business goals or personal expenses. This functionality leaves space for a diversity of useful features, such as budget tracking, budget modification, setting budget limits, emergency fund planning, shared budgeting, budgeting insights and recommendations, custom spending categories, etc.

By connecting users’ accounts to various banking or credit verification systems, you can offer comprehensive functionality for credit score monitoring. With such features, a user can track changes in their credit score and get alerts once any issues, such as unauthorized activities or errors occur in the credit report. With such a proactive approach, users can maintain a good credit standing, which makes it easier for them to qualify for loans, credit cards, and attractive interest rates.

A simple personal finance app also needs a bill reminder for both recurring and one-time payments. This functionality helps users avoid late fees and penalties by notifying them of upcoming due dates and ensuring timely payments. As a result, a user can maintain an excellent credit score and boost the efficiency of one’s finance management dramatically.

To monitor incomes and spending, provide analytics for financial habits, and offer a complete overview of a user’s budgeting practices, a personal finance app needs integration with banking and payment systems. This functionality offers a complete overview of transactions, as well as monitoring of bank accounts. Achieving this integration through various APIs requires deliberate attention to security and might be quite challenging. However, such features are vital for the usability of a budgeting app and can be efficiently handled by a team with solid fintech expertise.

As has already been mentioned, analytical tools are very important for a personal budgeting app. They provide users with detailed insights into their spending patterns, income distribution, and financial trends through visual aids like charts and graphs. The key benefits of such features are informed decision-making, improved control over a user’s finances, and effective budgeting. With such tools, both a business owner and a regular user can identify areas for potential savings, as well as understand one’s financial habits and ways for improving them.

Investor portal is another popular part of budgeting apps. A user can add information on one’s investments and track their statuses. The feature set includes data on returns, and investment statistics, and can even include an investment advisor. While not directly linked to personal budgeting, investment features open a vast space for the further development of an investment app. Over time, you can grow your solution into a complex system including features for regular users, businesses, and top-level investors.

There are certain strategies that will help you grow an ambitious startup into a successful system with a solid user base. Here are some tips to consider while launching a personal financial software project.

Starting with an MVP (minimum viable product) is an excellent idea for most startups, including the ones aimed at building personal finance apps. This approach involves creating the early version of your app with its core functionality, providing it to the target users, collecting their feedback, and continuing the development based on this feedback. An MVP strategy allows you to quickly test your product idea with minimal resources. In addition, you will get an opportunity to understand user attitudes towards your financial planning app. You will determine whether your budgeting features are really in demand and provide a unique value to the users. Upon collecting the user feedback, you will have an opportunity to adjust your functionality to user needs and continue the development of the product.

To expand your user base, ensure that your app is available across different platforms. An ideal solution for a startup aiming at a wide outreach is applying cross-platform development technologies. Frameworks like Flutter or .NET MAUI perfectly fit the development of apps offering a native-like experience on different devices and operating systems. This allows you to share the same codebase across different devices, saving time, budget, and effort for your developers.

The market of fintech mobile apps is very competitive. To help your personal finance management app stand out, you should be ready to ensure its unique market positioning. Specific target audiences, unique features, and outstanding user experience will work. However, thorough research is needed to gain a real competitive advantage. That’s when a product discovery phase comes into action. It involves market research, planning your product’s market positioning, and some essential estimates on the project. If you want to develop a quality budgeting app that will find its niche in the market, a quality discovery process is very important.  

As has been already mentioned, the fintech market is governed by many regulations, such as FINRA, AML, etc. Moreover, rules and standards differ from country to country. To avoid unpleasant surprises, you should understand all the related regulations and have quality compliance strategies created in advance. This will help you avoid reputational damage, costly sanctions, and restrictions that could hinder the success of your personal finance app.

Cloud has already become an essential attribute of software development. Its value is even bigger when it comes to startup software development. While dealing with the best cloud platforms, such as Azure or AWS, you pay only for the amount of compute resources you consume. This prevents you from overspending and allows you to stay in control of your project’s budget. In addition, cloud architecture development brings great flexibility and scalability that become vital for startup solutions intended to grow over time.

User satisfaction is essential for many projects. However, when it comes to startup apps developed for competitive markets, the value of excellent user experience becomes even bigger. That’s why you should never underestimate the value of UI/UX design for your app. If you are developing a web application, focus on the best front-end technologies, such as Angular or React.js. Or apply the best cross-platform development technologies. For example, .NET MAUI is known as a stellar solution when it comes to building attractive cross-platform UI/UX designs.

The demand for personal finance apps is high, and such a startup solution offers many promises, such as continuous expansion into a full-fledged fintech ecosystem, profitable cooperation with various organizations and institutions, recurring revenue streams, and a rich potential for fintech integrations. While there might be challenges with security, regulation compliance, international outreach, and market competition, the right approach will help you solve them. Go with an MVP, ensure cross-platform outreach, provide unique market positioning, rely on regulation consulting, and embrace the benefits of the cloud to maximize the chances of success for your personal finance applications. 

Finding the right team for solving all these problems is vital. Leobit, a Microsoft Solutions Partner, compliant with GDPR, CCPA, and OWASP, with expertise in the fintech domain and startup software development is ready to provide you with such a team. Contact us to discuss your opportunities for releasing the next big thing in the domain of fintech startups.