A barebones PFM app that charges users $99 per year to access its premium features suddenly broke the top 10 most downloaded financial app list on the Apple iOS App Store, at one point eclipsing established brands like Mint, Paypal and Venmo.

The emergence of the EveryDollar app, promoted by financial advice celebrity Dave Ramsey, has some in the industry calling it more of a shill than PFM tool, and others hailing it as a genius app that manages to distill budgeting into a simple, effective mobile solution. 

The firm behind EveryDollar, Ramsey Solutions, says in response that the app's March 23 debut has lessons for the digital wealth industry about the type of tool that people will actually download and use.  

“What we found is that most people who used a fancy budget tool weren’t actually using it to create a budget," says Michael Finney, senior vice president of EveryDollar at Ramsey Solutions.

“Some were using spreadsheets on the side or just not creating a budget at all; others were hoping that an automated system would categorize their spending and send them an alert if trouble happened. EveryDollar wants to help anyone who has either been too afraid to try a budget or who has tried other tools but just can’t seem to stick to a budget.”

The solution is a common-man approach, Finney says. “PFM is great as an industry term, but it doesn’t seem to mean a lot to regular folks. EveryDollar is simple enough for just about anyone to use."

DROP-DEAD SIMPLE

After users set a monthly budget on its website, EveryDollar allows them to track expenses, income and savings through the site or with the EveryDollar mobile app.

Open the app onto an iPhone6 Plus, and the screen becomes very ordinary — the app itself is set on a plain white background, with no graphical adornments and simple text.

The categories too are simple — income, food, giving. Users set a budget on the website, and with every expense entered, the mobile app updates them on how much they have left to spend.

How the EveryDollar app looks on an iPhone. Image: EveryDollar

“[EveryDollar] makes it incredibly simple to take your income and give every dollar a name," Finney says. “We have already received great reviews over the drop-dead simple interface.”

“Because EveryDollar isn’t trying to be your checkbook register or a digital envelope system, it’s incredibly flexible and easy to set up,” he adds. “At the end of the day, it really is all about the budget.”

Ramsey Solutions uses third parties to power some of EveryDollar’s functionality, but all of the code was written in-house, Finney notes. In addition, the company has not received any venture-capital funding. “As a debt-free company, we were able to fund this massive initiative with cash,” Finney says.

And yet, the app's functions are split between a basic free version, and a premium version with a $99 annual subscription that gives users the ability to drag and drop transactions directly from their bank to their budget.

This fee has gained the app its biggest criticism. In the words of one user on Reddit: "Ok, so I start budgeting. Let's see where I can reduce my costs. Oh! My budgeting software shows that I am spending $108 a year on my budgeting program. Might as well cut that out. "

The cost for additional service will eventually have an impact on the app's popularity, says Alex Filiaci, senior analyst for bank, credit card and small business card monitor research services at Corporate Insight.

“This is really nothing that anyone couldn’t do with a spreadsheet and a little discipline,” he says. “There are other services like Mint, which is pretty popular, and [Capital One’s] Level Money, and both of those let you do everything that EveryDollar does.

“On the web you can input accounts and sort your transactions, whereas the mobile app just lets you check a budget that you’ve created on the web and let s you input transactions, so it’s a little limited on the mobile side,” he notes.

STAR POWER

Filiaci chalks up EveryDollar's initial success to the influence of Ramsey, author and radio host of the “The Dave Ramsey Show.”

Ramsey has written five books, all of which made the New York Times best-seller list, including Financial Peace, More Than Enough, and The Total Money Makeover. He claims to have more than 8.5 million listeners each week on more than 550 radio stations, “The Dave Ramsey Show” channel on iHeartRadio and a 24-hour online streaming video channel. He has more than 633,000 followers on Twitter.

“Ramsey is obviously a pretty well-known personal finance guru, and that’s powerful as far as his brand goes in terms of the EveryDollar app,” Filiaci says.

“It is somewhat curious that a personal finance guru would be charging for a service that is available for free elsewhere,” he adds. “The celebrity factor has helped to push it up in the rankings, but there are actually free apps out there that actually do more than his app does.”

Filiaci notes that Ramsey has repeatedly railed against the perils of credit card debt.

“On the screen when you go to sign up for EveryDollar Plus, on the screen where you enter your payment info, it asks for a debit card number rather than the typical credit or debit option, which fits with Ramsey’s anti-credit-card position,” Filiaci says. “However, I was able to sign up with a credit card."

Finney stresses that EveryDollar's basic version is free to use for almost every feature, including creating a budget. He said Ramsey Solutions built its own sync function so that the data is always ready for users to access from any browser or supported device.

“EveryDollar Plus costs $99 per year, although that is subject to change,” he adds. “We really wanted it to be free, but it is not cheap to provide the banking connection or world-class support.”

“We know there are a lot of sites out there that can connect to your bank — but none of them connect your bank to your actual budget in a way that is fun and easy to use."

WORTH IT?

EveryDollar isn't trying to beat the competition in PFM apps, Finney says.

“We aren’t out there to try and take people away from their current budget tool. If you are currently doing a monthly budget where you give every dollar a name and follow through with tracking your spending against your plan, great! Keep doing it!"

“The sweet spot in the market is people who feel that they should have more money going to things like paying off debt or retirement – EveryDollar is great at helping you focus your money on what matters.”

That's the most compelling aspect of the service, notes Grant Easterbrook, co-founder of Dream Forward Financial. Though $99 might seem like a lot for an app, he says, it is very cheap if you perceive it as the fee for a year's worth of financial management.

"At $99 per year, if you think about it, if it’s really good and it costs approximately $8 per month and creates more than $8 of value, then I could see [the cost] being justified that way," Easterbrook says.

“That said, the people who most need budgeting have the least amount of cash, so if it’s $99 up front that’s a high hurdle to climb for many,” he says. “Still, if it really helps people to be smarter about their finances and save more, then it could be worth it.  There are two sides to that coin.”

Easterbrook says EveryDollar's biggest challenge will be keeping its users engaged.

“If you're relying on an online or mobile budgeting tool, it requires a lot of manual inputs. You have to do so honestly, not guesstimate expenditures – you have to put in the exact amount.

“To be successful, users have to stay engaged over time. Purely do-it-yourself budgeting is hard, but it is also extremely important in terms of the potential to help a lot of people.”

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