Self Incurred Savings Taxes


#7

My main concern around this would be what’s the end goal? If you want to put a tax on something like eating out, cigarettes or whatever it’s probably because you want to curb that behaviour.

So if you tax too high then maybe you’ll curb it, but you’ll not see any money in your ‘tax’ pot because you’ve stopped doing the thing, or are doing it much less.

If you tax too low then you’ll probably just continue anyway and then enjoy the 3% extra cash at the end of the month, so no habit change.


#8

Quite simply @djh, saving money.

Precisely! If you stop the bad habit you’d have no money in your “Tax Pot”…but where would it be? In your Balance! :grinning: You would have successfully deterred yourself from a bad habit and are now saving money because of it.

Even if you tax “too low”, you’re still saving money each time you indulge in your habit.

  1. You have £2.00 in your Balance.
  2. You buy a Chicken Burger for £1.00.
  3. You are Taxed 20% for “Eating Out”.
  4. Your Balance is now 80p (£2.00 - £1.20).
  5. You cannot buy another Chicken Burger.

#9

Speaking with my father just now, he came up with a splendid idea. Assigning your Taxed category to a Scheduled Payment Fund such as your Gym Membership.

Every time you Eat Out and are Taxed, that Tax goes into a fund toward your Gym Membership.

Good Job Dad!


#10

I guess the bottom line is, the use of such a feature essentially is the saving of small sums of money into pots of goals triggered by specific expenditure. I get that.

It’s a fun way of saving, whether you call it a tax or not. It would be equally fun applied in a myriad different ways.


#11

I’m all for various different methods which allows people to save money.

But I can’t help but feel a lot of these things (like coin jar), is a half way measure, and tends to avoid the main issue of money management.

We are becoming a bit of a nanny state, where we ignore the skills and habits needed for saving (and managing your finances in general), and instead, we have these “solutions” which do all of the saving for us (by looking at our spending habits etc).

So whilst it may work for some people, and there is clearly a lot who could benefit from something - I’d rather see people really analyse their spend, and work it out for themselves.


#12

What you are saying, is effectively an IFTTT integration with Goals - Similar to what Monzo has.


#13

@nickhoward Should we also eradicate life guards and let bad swimmers die off through natural selection? It’s quite a leap but it’s on the same plane. :joy:

I agree that financial management skills are not widely taught, though these “solutions”, are aids. The way you aid a child with stabilisers on a bike. One day, he/she will be able to ride unassisted. In theory at least.


#14

Haha - I think we will need Hasselhoffs for ever! :joy:

Like I said before, I’m sure it will benefit some people - I know Starling have had conversations with IFTTT in the past, but there is a security issue that is yet to be resolved.

Monzo has it, and whilst I personally don’t use it, many people do (for various different reasons).

I see a “fun” benefit to it, and “subliminal” element to this type of saving.

So I’m not saying it’s a bad thing as such, and any option which aides saving is always good.


#15

So would I @nickhoward, but we’ve all seen just how ill-prepared new-earners are for the rough and tumble of personal finance.

For so many it seems that overdrafts, savings, direct debits and getting through the month are a constant puzzle - and they need support (earlier rather than later).

In the meantime, if an app can generate some sense of order and progress into their finances, I’d say go for it.


#16

I agree to an extent.

Although given the closeness to the IFTTT integrations I’ve mentioned, I would think this “tax” would have less of an effect than the links which add money for actually doing something (running/cycling etc).


#17

Amen! :joy:

I’m all for keeping it in house at the moment. Integrating with other apps would be nice, though having a Gym fund in your Starling account that gets topped up with Fast Food taxes seems grand to me. No need for cross app support. I prefer simplicity.

I watched the Monzo/IFTTT video about integrating with other companies to do this and that and as good as it sounds, it creates a whole web of money coming in here and going out over there. At least if it’s all under one roof (Starling), it isn’t technically going anywhere, but rather being “ring fenced” until you decide to do something with it.


#18

I think IFTTT will need to be a whole lot more accessible and intuitive for the masses to gain traction.


#19

I like the idea, but I would put this very low down the list of things I’d want from Starling right now.

However, can I just say your mock ups, and general ideas which stir up good discussions are excellent!


#20

In all honesty, it’s all nonsense to me too. I’d rather just have my cash with me and do away with all these cards and banks. Cards are already somewhat flawed in that you never see your money disappear. When you spend a tenner though, you see it leaving your hand and feel that tear slide down your cheek :joy:.

All these ideas are gimmicky and weird, but like you say, they work. Same with all these fitness apps, reminding you to drink water and when to breathe lol. They are in no way necessary and may not work for everyone, but they’re there in case you do need a helping hand.

Cheers! I need to get a life :laughing:


#21

I like the suggestion and the various comments in the thread.
Yes, we could just scrap all this tech nonsense and tell people to be better at managing their money - however… Welcome to the 21st century.
I have a tennage daughter, who I think is quite good when it comes to managing her money, but I need to recognize that her world is a technical one. EVERYTHING is done on line or via an app, and money management is no exception. Any little tool or feature that helps has got to be a good idea.
And that doesn’t just apply to the younger generation though. If I analyze my own spending, I would guess that less than 10% of my transactions involve cash. That’s why I look to banks like Starling and features such as goals and spending insights. Without these ‘gimmicks’, keeping track of spending is time consuming.
So things like this Tax idea, coin jar, IFTTT etc are essential in the modern world.
And it’s also one of the reasons why I have bleated on in the past about the need for a young person’s account at Starling.


#22

My previous point of “better money management”, was more about making people aware of their spending/saving.

Whilst these IFTTT integrations (or this “tax” type of saving) are great for some people, the whole point is that you don’t realise you are doing it.

It’s supposed to just happen in the background, and effectively feel like you aren’t saving at all.

That wouldn’t lead to good practices for money management, because it teaches kids that money will just appear in your savings accounts (Goals), if you just carry on with what you are doing, and don’t think about it.

Starling are very well placed to offer better analysis of your spending etc, but I certainly won’t be recommending the little quirky integrations when my kids are old enough to get an account (certainly not as a way to actively save money).

The only thing I’d recommend for them would be the “fun/gamify” way of saving with integrations like Strava for running/cycling.

So whilst they are a great addition to a 21st century tech bank offering, I don’t think they address the issues of money management as much as people think they do.


#23

I think a way a doing this, maybe not by linking to Strava (I hate running, so why would I want to run AND pay for the privilege?) would be something like this:

Setup a goal. Have a target AND a date to achieve that target. The goal then works out how much you need to save per month to meet that. If at the end of the month you have saved that, you get a star (and that means, unlike me who can’t save anything - that’s money paid into the saving goal and remains in the goal for the whole month). You get a Silver star if you’ve saved the required amount, you get a Gold star if you’ve saved a higher amount (20%+?). The amount to be saved to meet the target is dynamically calculated each month based on how much you saved.

So, for example.

Planning next years holiday - need to save £2000 in 10 months. So, the goal works out I need £200 per month on average saved.

First month - I save £200 so get a Silver star. That leaves £1800 to save in 9 months - so saving target stays at £200.

Second month - I have £300 so get a Gold star. That leaves £1500 to save in 8 months, so saving target moves to £187.50 per month.

Third month - don’t save anything. So no star. That leaves £1500 to save in 7 months so saving target moves to £215 per month although it can also suggest an additional one off payment of £100 to get back to track…

An added feature of Savings Goals could also be the ability to add optional ‘item amounts’ into the goal. The ‘saving for holiday’ is a good example - you need to book the flight, hotel, insurance, spending money so in the £2000 saving goal you could break it down to:

£300: Flight
£1200: Hotel
£100: Insurance
£400: Spending Money

Then the goal will tell you when you saved past certain levels:

You’ve saved £400 - congratulations you’ve covered your flights!
You’ve saved £1500 - You’ve got your hotel covered now!
You’ve saved £1600 - You can get your insurance
You’ve saved £2000 - Congratulations! You’re all set for a great holiday!

From Starling’s view (although I suspect people will hate this idea…) - they could even ‘monetise’ goals by having some suggestions of suppliers when you’re creating them. So, create a ‘Holiday’ one - get a link to Easyjet, Ryanair or Thomas Cook…


#24

I think your idea is better from an out and out savings point of view (Goal divided by number of months for example).

The Strava integration is more for people who enjoy running/cycling, and it gives them a little boost (the further/quicker you run, the more you’ll save).

The success of “gamifying” things like this is well documented with other apps.


#25

YNAB does that - that’s one of the reasons I find it so useful.

I’d love the stars and congrats though - I’m a sucker for fake approval messages though. I genuinely grinned to myself with joy when my Fitbit said it liked me! :joy:


#26

I run and cycle regularly - I want to receive a reward for new PBs, not have more cash deducted from my spending pot. :joy::joy: