Budget Tracking Through Value
This post is part of a series where we’ll explore how technology can change our perspective by writing and designing novel products every week this year.
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I spend a good hour a week staring inside stores. Not blankly, but rather into the essential capitalist existential crisis. Should I buy this, or not?
Financial wellbeing is core to our agency — whether it be for the crucial things in life like the roof over our heads, or for the guilty pleasure of a chocolate bar. It’s no wonder that the number of apps that promise to be your financial sidekick is endless.
There is everything from power-user apps that ask you every single detail about your income and spending, to low-touch apps which invest your spare change automatically, to vacation-mongering apps which promise you your wildest dream, should you follow their financial advice.
One thing, however, that these apps often miss is the value of your purchases to you.
Introducing Budget
Budget is an app that helps you improve your financial well being by tracking the value of your purchases. Instead of telling you that you can’t buy something, Budget just reminds you of your previous purchases to keep you mindful of your spending habits.
Budget’s core principle is that we should expect more value on purchases that are more expensive.
Every time you make a purchase, you add it to Budget. The cost of the purchase becomes its “life” — a counter which proxies its cost to your financial wellbeing. As you continue to receive value from a purchase, its cost is amortized. This is reflected by the gradual decrease in this counter.
By focusing on the long-tailed impact of a purchase, Budget encourages you to think about the long term value of a purchase, rather than its fleeting immediate gratification.
Reducing Financial Anxiety
Because finance is critical, our skin starts to sweat even at the mention of it. Unlike other budgeting apps, Budget is designed as a self-improvement app rather than a financial one.
Since we already know that the app is used to track purchases, we can remove “$” to not only make the app cleaner, but also reduce its connection to finance. Instead of being centered around spreadsheets and bar charts, Budget uses circle charts. Though less precise, it is more visually appealing.
Financial mindfulness is not about exactness, but rather consistency. By prioritizing aesthetics we increase delight and thus encourage long term usage.
Another way Budget helps you to build this habit is through rewards.
To encourage you to remember your purchases and its value, everyday you can open the app to reduce all your purchases’ counter. This simple, yet rewarding task helps you stay on the right track by guiding you every step of the way.
Active Engagement
While passive budgeting systems, such as those which automatically round purchases, may be convenient, they don’t address the fundamental behavioral issue where we buy things because we like it in that moment. In contrast, Budget engages the user so that they can grow to the point where they automatically think about the long term cost of a purchase.
Another powerful human motivator is seeing progress. Budget prominently shows a timeline of how well you are doing by visualizing your recent purchases. When you enjoy what you have this line reduces. When you buy, however, this line comes back up. By visualizing purchases over time, Budget motivates the user to purchase slowly and mindfully.
Taking Control
It’s important to remember that the value of a purchase is dynamic. In moments where you wear something and people compliment you, or when you finally play that video game you bought because your friend came over, you’ll find more delight in your purchase. Budget allows you to reduce the counter further to reflect the extra joy and value you’ve found.
Additionally, to make it even simpler for the user to track the value they’ve extracted, Budget begins to learn how you find value and creates shortcuts for them. It’s likely that when you find value in your Playstation, you will also find value in one of the games you’ve bought for it.
Making it easy for you to keep accurate updates gives you a sense of confidence which will lead to consistency.
Future Iterations
Purchases can be more complex than a one time thing. For example, a subscriptions would affect the life of a purchase since it is recurring. The financial cost of unused subscriptions adds ups — if you don’t gain enough value from a subscription before its next cycle, the number in the counter will continue to increase instead of decreasing.
We can also think about how to convert the value of the counter back into dollars. Suppose you have a $100 membership which lets you bypass a $10 fee every time you use it. This means it takes 10 visits before the membership becomes valuable. But let’s say that the membership also has an effect of reducing your friend’s fee by 20%. In this case, if you go with your friend 5 times, you actually reduce the number of visits you need to do to nine.
By recognizing these different patterns, Budget helps you make better decisions, even on subtler costs.
TL;DR
Financial wellbeing gives us agency, which in turn gives us happiness. We can better help people with their financial situation by reminding them to be mindful of their purchases through consistency, progress tracking, and reward. We can also better serve them by providing shortcuts and making it easy to be accurate. While telling people what they can and cannot do, or allowing them to not pay attention is easier, empowering people by giving them the tools to improve their decision making process is better.
P.s. For big ticket items like your rent and car payment, this system won’t be as helpful since they are a large portion of your income and thus need accuracy, but this exercise will be left to the reader ;)
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Photo by Tom Ritson on Unsplash
