When I ask new Even members what they were looking for in a financial app, often the answer is something like this:
“I wanted an app that would give you some data about how you were spending your money and where you were spending your money, so I could see, ‘Okay, I’m spending all my money on coffee, I’m spending all my money on clothing.’”
It’s very common for people to ask for a solution that involves tracking their spending (and specifically, as you can see in the references to coffee and clothing, their discretionary spending, as opposed to their fixed spending).
Here’s where we get to say, OK, we’re not sure whether what people are asking us for is exactly what they really need or want. But the fact that they are asking is a clue to something. Why are they asking? What’s driving this desire to track spending?
Part of it is that many of the existing financial systems and apps out there revolve around budgeting for each category of spending and then tracking spending in those categories. It makes sense that people would ask for something they know is out there.
But as we’ve learned from many interviews with Even members, another part is that people very much want to save, and they see spending as the enemy of saving.
Very often, when I ask an Even member what challenge stands in the way of them saving, they don’t say it’s their unpredictable checks, or their lumpy bills — they say it’s their own spending.
There are two different ways they describe how spending prevents saving, which correspond to two different ways you can save: Save First and Save Last.
“I would save like maybe half [of each paycheck], but then it would get to the point where, ‘Okay, I spent $50 on gas, I spent $75 on this book, I don’t have enough money to cover the rest of the week.’ And then at that point, I would have to dip into my savings. And then by the time it all comes to, it’s like at $12 and I didn’t save anything.”
Even though you saved first, before beginning your discretionary spending, you ended up having to withdraw some or all of the money you just saved, because your spending went too far. Spending sabotaged saving.
“I’m a little bit bad as far as saving, knowing, ‘I should probably save this money rather than maybe going out to eat or going and spending money on video games and movies and stuff like that.’”
When you save last, after discretionary spending, you’re counting on there being some leftovers from your spending to save. But often there are no leftovers because, again, spending took everything.
Either way, spending comes out looking like a real villain, directly implicated in the theft of what should be people’s savings. Naturally people want to fight that villain by learning to control him—and planning and tracking look like great methods of control.
But what’s behind this desire to track spending, what we’ve learned is the ultimate goal of it, is saving. So now we know what people really need: it’s not to track their spending; it’s to save more.
Now, just because people asked for tracking as the strategy for saving, doesn’t mean that’s not actually what we should give them. But we don’t think tracking is the best way. More on that in a future post.