Self Incurred Savings Taxes


#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: