The free Level Money app for both Android and Apple iOS calls itself a “financial GPS” to get you “from where you are now to where you want to be.” Launched in October 2013 and purchased by Capital One Financial Corp. (COF) in 2015, the app is geared toward millennials and designed to eliminate the need for old-fashioned budgeting. More than 800,000 users have downloaded the app and managed more than $25 billion in transactions. Here’s a detailed review of how Level Money works and whether it could be the perfect tool to help you budget.

Level Money’s Modern-Day Budgeting Concept

By pulling data from all your linked checking, savings and credit card accounts, Level aims to be the digital equivalent of opening up your wallet to see how much money you have left. The idea is for the app to automatically update when you make a purchase, get your paycheck or pay a bill so you always know how much money you really have available to spend.

Tell Level how much income you expect to receive for the month and what bills you’ll have to pay and when. You can either let the app try to identify these items based on past transactions from your linked accounts, tag those transactions yourself or input the data manually. You also tell Level how much you want to set aside in monthly savings. The app then subtracts your bills and savings from your income to get what it calls your “spendable,” short for “spendable balance.”

On the “spendable” screen, you’ll see how much money you have to work with for the day, the week and the month. The app tells you how many days are left in the month so you can see how long you have to make your current balance last, and it lets you know if you’ve exceeded your spendable budget. If you don’t use all your spendable for the day, it rolls over. In other words, your spendable budget is not “use it or lose it.”

Level bases your spendable amount on income and bills you’ve actually received so far that month, not income and bills you tell the app you’re going to receive. So if you tell Level that you’re expecting $1,000 to come in and $50 to go out, but your current balance is a mere $3.60, your spendable will be $3.60 for the day, the week and the month. Level doesn’t encourage you to spend money you don’t yet have. However, if you want to see how your situation will look if everything goes as expected, you can check the app’s “plan” screen and see that you’ll have $15 a day and $450 per month to spend based on the income and bill information you provided and the $500 you want to put in your savings account. (For related reading, see our Budgeting Basics tutorial.)

Security

Level Money uses 128-bit encryption, just like financial institutions’ secure websites. Capital One doesn’t sell your data—the app doesn’t even have advertisements despite being free—and it can’t touch the money in your accounts. The sign-up process asks you to create a user name, password and four-digit PIN. Then it asks you to connect a bank account. Whether you use one of the big banks, a regional bank or a small credit union, you should be able to connect your account: more than 18,000 financial institutions are capable of connecting with Level, though some have better functionality than others. And Level doesn’t just work with checking and savings accounts; it also works with credit card accounts. To get an accurate picture of your budget, you’ll need to link all the accounts that affect your cash flow.

If you’re familiar with the online budgeting program Mint, you’ll recognize the process of connecting accounts to the Level app because both use software from Intuit Corp. (INTU) to link your accounts securely. You’ll need to provide your login details for each account, and once they’re connected, you’ll see your recent transactions within the app. Some banks, like JPMorgan Chase & Co (JPM), won’t connect your account unless you’re signed up for paperless statements. Others, like Capital One, require additional authentication steps. Some banks block third-party apps, however, and if your bank falls into this category, it won’t work with Level Money or any other app.

Features

Level Money is intended to help users budget whether they have a salaried job with a steady paycheck or work as independent contractors or hourly workers with irregular incomes. The company understands that many people’s income and bills aren’t the same from month to month. It wants to help users manage cash flow, even if it’s variable, and has incorporated flexible money management features into the app for this purpose.

When you’re setting up bills and income, for example, the app doesn’t automatically assume they arrive monthly; you can select from weekly, every other week, twice a month, monthly, every two months, every three months, every six months or yearly. You can also add multiple income streams with different sources, amounts and frequencies. You can even account for income or bills that appear at unknown times.

The app’s “insights” feature lets you categorize your spending. Tag previous transactions or specify a merchant name and Level will keep a running tab. So if you want to keep track of how much you’re spending on coffee or baseball games or clothing, Level will help you do that. It can display your spending for each category as the total for the current month or as this month’s running total versus last month’s total. The insights feature can also try to predict your future spending based on your past spending. If you don’t like the way the app is categorizing or tracking your transactions, you can edit them.

Level Money also lets you set up several types of notifications. It can notify you about “weekend spendable available,” which shows you how much money is available at the beginning of the weekend, and it can inform you about under-spending or overspending mid-week, which shows you if you’ve spent less than or more than 50% of your weekly spendable. There’s also a notification that will give you a daily morning summary of your previous day’s transactions. You can be notified about specific events, too: when your income varies from your plan by 10% or more, when your account has a transaction larger than $250, when your bank has charged you a fee, when you have 25% of your monthly spendable left, when you get a deposit larger than $200, or when your balance goes below $100.

Level can accommodate different joint account management needs, too. For example, if you share accounts with a spouse but maintain separate “fun money” budgets, Level lets you tell it to ignore certain transactions, which lets you get a picture of only your own spending. On the other hand, if you don’t actually have joint accounts but still want to track your spending together with your mate’s, you can both use a single Level account to track your spending for your individual accounts by linking each of your accounts to the same Level account. As long as you don’t actually give your partner your login credentials, they won’t have any way to touch the money in accounts that aren’t theirs. Those credentials will be stored securely within the app.

Finally, if you have no income—say, because you’re unemployed or you’re a full-time student—you can manually enter in the income category an amount that you want to live off of for the month. You can also activate “burn rate mode” to tell the app how many months you want your current account balance to last for.

Limitations

Level Money’s biggest limitation is that it can’t truly update in real time and give you an up-to-the-minute, accurate picture of your finances. The app gets its information from your linked bank accounts, so if, for example, your credit card issuer doesn’t post your most recent grocery store purchase to your account for three days, it won’t appear in Level Money until then, either. In the meantime, your spendable won’t be accurate, and if you forget about that purchase, you might overspend.

But let’s assume for a moment that your linked accounts did all update instantly. Level only updates your transactions as often as once an hour and it does this automatically; there’s no manual refresh option. Further, users have complained in reviews that their accounts won’t update, that they have to repeatedly authorize the same accounts to get them to continue updating, that they get repeated error messages when trying to use the app or that their transactions stopped updating after an app version update.

While Level’s flexible budgeting tools are a step in the right direction, they aren’t perfect. If you have a recurring bill or recurring income that arrives at an odd interval that doesn’t correspond with one of the app’s presets, you’ll have to add it manually each time it arrives. There’s no way to manually create your own interval such as “every 10 days.” Also, if the app doesn’t automatically detect some of your bills or income, you’ll have to tag or input those transactions manually to keep your spendable accurate.

If you don’t have any bank accounts, Level is not for you. It’s not designed to track cash transactions. It also doesn’t support investment accounts. It is a simple budgeting tool, not a comprehensive money management and financial planning tool.

Finally, for better or worse, Level can’t move your money, so while you can tell the app you want to save $500 for the month, it’s up to you to actually put the money in your savings account and leave it there.

The Bottom Line

Level Money can’t control your spending or force you to make smart financial decisions, but it can help you hold yourself accountable by monitoring and tracking your income, bills and purchases. Assuming the app works properly on your device, having that information at your fingertips no matter where you are, even if it isn’t always perfectly up to date, is better than not budgeting at all. (To learn about other money-management apps that could help you, read: BillGuard vs. Mint vs. SigFig vs. Personal Capital.)

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