Money is confounding. It should be a ledger of digestible numbers but is instead an inscrutable equation of emotions and guilt. You seize up with fear when you think about your balance, and have been stuffing paper correspondence from the bank into a laptop case, in turn sequestered under your bed, since 2011. The financial is personal.
Moreover, managing your money is rarely straightforward. Every payday you are animated by good intentions: to budget, to save, to finally “put your finances in order”. A few days later, after buying a monthly travelcard, throwing some money into the yawning pit of your credit card bill and paying your rent, you are left with a pittance. Nonetheless, you buy three rounds of after-work drinks, which you put on your credit card.
Unfortunately, credit is a distraction, not a solution: to wrench yourself out of the credit-debt spiral you need (heavy) back-up. Mercifully, London’s fintech industry is growing at a rate of knots, and many of its sharpest minds are focused on real solutions.
“People often say they have more month than money,” observes Mutaz Qubbaj, CEO of Squirrel, a web app which bills itself as “the UK’s simplest way to create and stick to budget” (squirrel.me). “They say that if their money is easily available then it burns a hole in their pockets. And they don’t know where their money is going across the month.”
Squirrel hopes to help by serving as an unforgiving budgeting tool. Enter your salary and bank details and it sets up a bank account that “sits between your source of money and your current account and helps you to manage or filter your money”. You set a budget, and when you’re paid Squirrel will deposit funds into your account weekly or monthly, according to your preference.
As Qubbaj points out, distributing your money evenly in weekly instalments will curtail your spending better than receiving funds monthly. “When the money is there people have trouble avoiding dipping into it,” he says. “You just want to spend it.”
Around half of those using Squirrel are structuring their finances around weekly spending money: Squirrel has found that although these people tend to have a smaller net disposable income they are successfully saving more than those who do not have weekly spending switched on. He assures me it’s secure and is regulated by the Financial Conduct Authority. Companies including O2, as well as the NHS, offer a free subscription to Squirrel as an incentive for employees. Normally it costs £3.99 a month.
You can use the app to save too: set an amount and it will siphon the money off so you don’t spend it. “Attaching it to a tangible event, such as Christmas, makes it more effective,” says Qubbaj. Certainly, if you repackage your profligacy as stealing from Christmas you might be more frugal. You can also employ Squirrel to siphon off a sensible amount for an emergency buffer, to cover a rogue bill.
Meanwhile, Monzo is an alternative to traditional banks: a virtual bank with no branches that will offer its own financial products, as well as a real-time app that keeps you up to speed with your transactions (monzo.com). It’s currently going through all the proper approval processes and can only offer pre-paid debit cards but it expects regulation to be lifted in early 2017, at which point Monzo can start to function like a real (virtual) bank.
“We were united by our loathing of traditional banking,” explains Tom Blomfield, Monzo’s CEO. “Every interaction was painful. If I were overdrawn, for example, it would take the bank three weeks to tell me via letter. Or you’d spend money on a Friday night and it wouldn’t appear on your statement until Monday or Tuesday, so you wouldn’t realise how much you’d spent.” With Monzo, you get real-time updates: a push notification as soon as you spend.
Monzo includes budgeting tools: set limits on spending in certain areas (“entertainment”, for example) and the app lets you know before you push the limit. “It’ll also notify you if you’re quarter of the way through the month and on track to overspend,” says Blomfield.
Furthermore, if you misplace your card, you can freeze it, which means that when it — inevitably — turns up in your jacket pocket, you can just unfreeze it. This is, obviously, better than cancelling it, finding it in said pocket, and then spending an hour being passed across a customer service network attempting to halt the process you have begun. There are 30,000 people currently using a Monzo pre-paid card and the app employs 60 staff in offices in Shoreditch.
So can tech help you get your money’s worth? “It’s financial freedom,” says Qubbaj. “It’s all about you taking control.”
Follow Phoebe Luckhurst on Twitter: @phoebeluckhurst
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