The #Psychology of #Savings and Personal #Finance with Qapital
Posted on April 13th, 2015
04/13/2015 @TurnToTech, 184 Fifth Ave, 4th floor, NY
Jane Ruffino – head of marketing @Qapital – talked about an app to help “millennial” savers save money and attain their goals. Qapital was started in 2012 and launched a product in Sweden in 2013. In March they launched an Apple app for the U.S. market with an Android app later this year. The app is paired with a debit card to one of 5 banks. The goal is to provide encouragement to save for one’s goals using automatic triggers and feedback on attaining goals such as money for a vacation or a major purchase.
Jane emphasized findings from focus groups targeting two audiences.
Age 18-24 – many see cash flow as savings
Age 25-40 – many see cash flow as reserves, but also are saving for bigger-ticket items.
In both audiences, the focus groups said
- money is boring, but pursuit of goals is important
- they want more from their money – but there is no education on how to invest their savings
- they don’t identify as ‘money people’ even if they are good savers
- they have anxiety about debt, stability and security
- shame defines their relationship to money – about having no money or not knowing what to do with it. This also appears when they consider if they deserve the vacation they want to take?
Given these findings, she recommends that the following be considered when designing the app:
- Make money less boring – create a sense of purpose: what do you want this year? Take care of needs and wants
- Let them be in charge – the reinforcement must match their interests and goals
- Give them credit – people know more about finance than they give themselves credit for – (money management associated with their mother)
- Validate their actions – e.g. gamify – save together to cheer each other on.
- Help them celebrate every win.
Making the goal concrete is essential to both give focus and create a tangible reward. Short- and intermediate-term goals are the emphasis. Creating the rules for saving should be part of the entertainment / reward for saving.
One challenge will be to keep users interested in the app to avoid the rapid drop-off in usage experienced by some fitness and dieting apps (see notes: Brian Cugelman from the previous meeting of ActionDesignNYC).
Further research on millennial’s money-views might be illuminating as we move from a zero interest rate environment (savings are a safe way to store money) to a higher interest rate environment (one can earn interest that will compound over time).
Jane’s emphasis was on savings behavior, but this might be the gateway to education on investing. I would not be surprised to see a relationship between savings behavior/rewards and risk tolerance/aversion as an investor(for a technical discussion of risk aversion download the paper on my research blog post).