I have worked for a bank for the best part of two decades but I am still rubbish with managing my money.
I have zero control or comprehension of where I am with my money day today let alone a longer term view with regards to things like pensions or mortgage pay off dates or my children’s university funds.
It is the day-to-day management of family household expenditure that is of most concern today. I am in a situation where we have a decent size mortgage, two young children, two salaries coming in and all the financial management that entails. What we are lacking are the tools, products and services to help. Somewhere a tiny violin plays.
We manage today using a series of accounts. One joint, two personal, a separate shopping account and we also have separate credit cards for petrol and just in case scenarios and we have one with a lump of debt on. I also have a credit card for work expenses which is automatically paid off at the end of each month (whether I have claimed my expenses back or not). All those products are provided by four different institutions and operated by two people (God knows what I will do when my kids have accounts).
We use these products as virtual biscuit tins to put hard(ish) limits on our spending. To break it own into manageable chunks of household outgoings, weekly shopping and personal expenditure. It works fairly well but it has taken is some experimentation and mistakes to get to fairly well i.e. The use of easily available credit without decent controls meant more debt. It is far from perfect and it really should not be like this.
Personal Financial Financial Management tools are not that prevalent in the UK at the moment for a number of reasons, mainly the ease of access to transaction data. Those tools would help to some degree but I have yet to see a bank implement one with these kinds of hard spending limitations. They have soft budgeting capabilities ‘oops you have gone 14% over your flat white budget this month you silly sausage’. Which might be useful to some (coffee drinking morons) but they give no sense of being really skint i.e. I physically only have this money to spend. For all the digital advancements today no one has really cracked the USP of cash, once you have spent what you physically have on you it is gone.
There are solutions more targeted to the underbanked and financially excluded such as prepaid cards and the likes of Amex Serve in the US but again they are also not prevalent in the UK. It feels like to me we have a very blunt set of basic products; The Current Account, The Debit Card, The Credit Card and The Savings Account. The basic tool set for the vast amount of people’s day to day financial needs.
I believe that thee setting free of transaction data will herald a new beginning, especially in the UK, and I applaud the governments focus on opening up APIs for all. (Get your responses in on that by the way). Clearly the data only allows you to go so far and what is really needed is a rethink and some bloody good design into what the basic tools of finance could become. Software is eating the world so they say but it has not really taken a nibble at the basics. It is just adding layers on top of the data e.g. soft budget target.
How can you engineer hard stops on spending? How can you make those budget targets really mean something. How can I get to the till in the supermarket and be filled with a sense of dread that I can’t afford this weeks Aldi shop? Across different products and institutions?
Some institutions have savings goals and saving pots i.e. logical splits of a single savings account. What about these for credit? A shopping biscuit tin. Hard limits for the week. Differing credit limits for differing pots which can be raised and lowered as need be.
These kind of biscuit tins would need to be understood by the network, the myriad of merchants and schemes. Today they would be hacked to create virtual cards or accounts and they bring about real complexity and push the boundaries of a system built on things like branch sort codes, linking money to physical spaces that may no longer actually exist.
This is a very rich seam, I have only scratched the surface of the singular products but what about them working in conjunction? What about different levels of control for different people i.e. family members. The accounts as software, allowing them to be programmed and played with.
Until we see a fundamental change to the basic tools of finance then I am not sure true control over the day-to-day spending of most folk is ever going to be well understood or feel like it is in control. Maybe this is just me being rubbish with money, looking for digital brilliance to save me from my laziness. The organisation that can help relieve the feeling of barely keeping my head above water will have earned a fantastic amount of loyalty. It is hard to swim carrying all these tins.