Yes you are right. A lot of the time it will be circumstantial and sudden and therefore very difficult to predict/prevent. We will have a lot of data including things we get from Credit Reference Agencies as well as what we get from the app which could be used to identify ‘indicators’ early on. We are planning to use this data to be pro-active in our approach to financial difficulties and we can contact customers early on if, for example, salary changes to receipt of welfare support or like you say - the customer is using payday loans. Of course the difficulty is getting the balance right as some people might not appreciate the pro-active contact. I would like to make our approach to financial difficulties transparent which might help - perhaps a blog post for the future!
+1 for Gamification!
I would love achievements and badges for saving sprees. Let us build chains of saving a percentage of our salary each month. Tell people how they rank in terms of saving a percentage of their salary each month (anonymously of course), i.e. “You ranked in the top 1000 savers by managing to save 23% of your salary this month!”, or something similar.
Also though, would love more fine grained control over categorisation of expenses. Personally I’d love to swipe a certain way on an expense to mark them as “Essential” and “Non-Essential”, so I can separately keep track of my discretionary spending, as well as my financial commitments. Also setting the budgeting period to commence and end on payday would mean I stop ignoring the warning notifications…
Thanks @anon79397384 for kicking off this discussion. I particularly agreed with @anon6625950 regarding banking that nudges you towards wise behaviour, and away from impulsive behaviour.
One way to help with this would be automatic virtual savings pots. My current account balance goes high for a few days when I get paid, and then drops significantly when all my bills go out a few days later. I would like an account that automatically ring fences the money that I need for bills, and hides it from me - so that my headline balance doesn’t show it. I currently achieve this using multiple accounts. A single account solution would be simpler for me, and might help people who can’t be bothered with too multiple accounts.
The idea could be taken further. Perhaps my monthly salary could be drip-fed into my headline balance to keep my spending consistent. Perhaps yearly costs (insurance, Christmas , etc…) could be identified and saving pots set up automatically.
By putting all the money in one pot, traditional current accounts nudge us towards spending because we think there is plenty - unless we sit down and do the maths. An account that nudged us towards financial wisdom would be a great social good, as well as a fantastic business.
Since the adopting the 50:20:30 approach won’t be suitable / desired by all users, perhaps this would be better managed by a 3rd party app. Too many options for different approaches would make the app complex & ultimately decrease useability.
Either way, the automation you’ve described sounds good & I’d like to see it get created!
I would see any application 50:20:30 analysis not as a daily/monthly budgeting tool replacing Targets, but as an annual or 6 monthly review. The aim of it really is not short term budgeting, but a review of users long term financial planning, something that Targets does not provide.
For example, imagine how the split would look for a 16 year old intern working in central London. Then as they get a job, get promotions over the next 3-5 years and their fixed cost ratio reducing in a positive direction…or not progressing, showing year after year that they are damaging their long term goals because they cannot save enough.
I do too.
My understanding of the purpose of the functionality that Christopher described was to enable monitoring of spend vs the budget you’ve set yourself on a daily basis.
While it would probably work perfectly for this particular approach, how do you tailor it for a completely different budgeting approach?
That’s why I think a dedicated app for this type of budgeting - that enables you to set your allocation & analyse your performance long term, while also tracking your spend on a day-to-day basis - may be the better solution..
Having said that, I do think users need to be able to set long term goals (for budgeting, large purchases etc.) in the app. And that’s where the Virtual Savings Pots functionality, along with Targets that can be set for different timeframes, will be so useful.
Agree with @anon44283977 on this. One of the biggest problems people face is being able to see how much money they have ‘available’. Currently banks will say you have £xx available which could include any overdraft etc and gives a false reality of your financial situation.
Auto money management would be a great way to help people get started with budgeting as it will automatically detect salary and recurring outgoings. This could be done by taking data over a few months and also by adding tags to income/outgoings. Now the ‘available’ balance could be anything left after virtually putting money aside.
The main issue with this is anyone who has irregular income as it will be hard to budget for that. In this instance I would suggest that the user be encouraged set a average income at the start of the month.
I added the feature suggestion here a few weeks back-Auto Money Management For Bills
I think that targets and categorization of spending are great tools for looking back at how I’ve used my money. They tell me that I’ve spent too much on eating out, for example, but don’t really change behavior. Perhaps I should but I don’t check how much money I have left of my target before buying a cup of coffee.
Also, Monzo is part of my overall financial life not all of it and so I’m only seeing a part of the pattern.
I prefer to know how much money I can spend today without going into debt. Income - Fixed Bills - Savings = Monthly Spend / No of days in month = Amount I can spend today.
As I spend, my daily amount reduces. If I spend less than my daily amount, I have a little more money to spend each day of the rest of the month and vice versa.
The only drawback is that I need to track each item myself rather than have being automatically tracked for me. But, doing that does stop me from over spending.
At the end of the month, I can track how I’ve spend my money and if I want to make any adjustments.
The budgeting scheme I currently use relies on using multiple accounts.
All my regular fixed costs come out of my current account (Mortgage, bills, basically anything covered by a direct debit or standing order).
Any irregular costs (annual insurance, basically anything that doesn’t get spent either weekly or monthly) get moved into a savings account at the beginning of every month. This is managed by a separate spreadsheet maintaining a running total of the breakdown of that account (i.e. which virtual pots the money should be in).
Any remaining monthly or weekly expenses get transferred to my Monzo card on a weekly basis.
Some of this could be managed automatically with virtual pots once the current account is released, depending on functionality. I’ll need to wait to see how the targets functionality evolves though (i.e. savings targets, different timescales per target etc). My budget currently relies on using finer-grained categories than are available in Monzo, so I may have to keep using an external tool in the future anyway.
I use a very simple envelope system. All of my bills and must pays go out (rent, phone bills, utilities, savings, pension etc.) then divide the remaining money by the number of weeks between pay dates (minus any other known expenses/one-offs for that month) place the cash in to an envelope per week and seal it (and write the date it can be opened). I then don’t open the envelope until I get to that date. Simple enough to execute and simple enough to make electronic, just allow people to ring-fence money in their account for a later date.
This x 1000. It’s exactly how I want budgeting to work in Monzo or at least have the option to choose from a number of different budgeting methods.
It’s really interesting to hear just how varied peoples budgeting techniques/ideas are. If i’m honest my assumption was that there wouldn’t be too much interest in this topic so i’ve been blown away by the number of responses. Most of the people I know don’t really budget so it’s interesting to see that a lot of people are budgeting and just how differently people do it.
I think it shows that the key is flexibility and variety because different circumstances mean different ways of saving. In an ideal world people would be able to see everything in one place with as little manual work as possible to sort all of this. A variety of pots or ring fenced funds is a great start to create the visibility to properly budget for people that only use Monzo. Just doing this and putting all fixed costs to a side should provide the ability to say “oh i can spend £20 everyday” - this kind of budgeting is more real and relevant everyday. Plus you get that positive feeling everyday if you manage to spend less than £20. But I can see why this would need to be expanded.
I really like @Fredello’s idea of savings goals for things like holidays. A function where you could have a pot for a holiday in 6 months for example where you need £600 - you could have a pot with a target of £100 a month and notifications or rewards when you are on track. All opt out of course! But I think these kind of things have the potential to draw in the ‘non-budgeters’ into budgeting which is why I like the idea of gamification.
I’ll add something from the other side.
I’m quite hmm, conservative with money. I rarely make sudden purchases, I always know how much I have on my account (+/- £30), I don’t spend a lot in general. While I might be proven wrong, I don’t think I’d like to have any targets at all.
What I would appreciate and look forward is being suddenly rewarded when Monzo app, after silent/hidden observing, would say stuff like:
- WOW, you spend no more than 5% more/less money this month in comparison to last month. What a consistency!" (I know it will be visible in reporting anyway, but it’s more about patting on the back for good behaviour
) - You spent £50 less this month than your average from last 3 months!
- You spent £15 less in ‘Entertainment’ category than last month!
While targets seem to be useful to keep track, I would like to get some confirmation that I’m not deviating from the path. I’m not sure if it really belongs to targets as a functionality, feels like it’s more of reporting/money watchdog/behavioural analytics?
I love the idea of drip-feeding money into separate ‘everyday spending’ account. Ideally that account would still be a pre-paid card so that if you go over your self-prescribed budget you need to explicitly make a decision to top-up and go over your budget. No accidental overspending, better control of money for people that are not invested into budgeting.
By the way: please keep the pre-paid cards even after the launch! I love the comfort of entering my card details or using ATMs knowing that noone can fraudently use them to steal all my salary!
I don’t budget, I know what my fixed expenses are and after that the money left over stays in my account.
I subscribe to YouNeedABudget, it works pretty well.
I’m not a big spender though and don’t have much debt, so budgeting isn’t really an issue, I mainly use it to keep an eye across all my different accounts (savings accounts, ISAs etc)
I’ve mentioned it before and I’ll mention it again…
One thing I love about the banking app Loot is it let’s you set a weekly budget of what you can spend altogether so I usually set myself £100 as a weekly budget and every time I spend it goes down… I’d love that a similar idea to come to Monzo. I understand it’s a bit more simpler then the targets we set but it doesn’t set a weekly target of everything altogether. I currently love loading £100 onto my loot app and then knowing when it’s all gone it should be the end of the week and anything I have left I know I’ve saved and can put it into savings.
That’s on it’s way 
https://community.monzo.com/t/targets-custom-timeframes-1/6242/2
I can’t wait for this. Then I’d easily start using Monzo again. I’ve only been using loot because of this feature. As soon as this comes to Monzo I’ll come back and it’ll help with my budgeting. Shame it’s 6-9 months but I’ll keep an eye out for updates.
the card has now been archived …