Technology is making you spend more. Here’s how you can use it to save
Every Pay Day, you dump as much money as you can into savings. But then there’s temptations — a flash sale at The Iconic, an UberEats free delivery code, the smell of a kebab at 1am — and you find yourself taking money out bit by bit. Before you know it, your account balance is back to zero.
If this story sounds familiar, you’re not alone. About a quarter of young Australians have less than $1000 in savings, and 28% have over $5000 in debt (not including HECS).
One reason we find saving so hard is because it’s never been easier to spend without thinking. And we’ve got technology to thank for that.
Technology — financial friend or foe?
Instant bank transfers. Apple Pay. Buy-now-pay-later. Spending your money (or other people’s money) has never been quicker or easier. But while tap-and-paying for a coffee is far better than counting out coins, this convenience can come at a real cost. As our money becomes less transparent, we become more willing to spend it. Many of us avoid checking our bank balances, because we’re afraid to know how much money we’ve spent.
Technology isn’t the problem here, we’re told. It’s us. And if we want to curb our impulse spending, we’ll need (surprise surprise) more technology to help.
But unlike products that want us to spend, the ones designed to help us save are complex. Download any finance app and you’ll find screens full of pie charts and health indicators that seem to tell you everything and nothing at the same time.
Or “roundups” for example. It’s an app feature that rounds up your purchases to the nearest dollar, then dumps the spare change into a savings or investment account. While nice in theory, you’re still required to spend money in order to save a few cents. And if the app charges you a monthly fee for its services, you may end up losing more than you gain.
Then there’s expense tracking. Some apps will show how much money you’ve spent on different categories like groceries, transport, entertainment, even adult services. While people spend hours fiddling with these categories (what if my 7-Eleven purchase was for food and petrol?), we’ve never heard of anyone who says this feature actually stops them impulse spending, or helps them make better decisions.
Luckily, there’s some other ways to prevent yourself from spending your savings.
So what are my options?
1. Set up a term deposit
If you haven’t heard of a term deposit, your grandma probably has one. If you put money in one and don’t touch it for a fixed period of time (anywhere between a month to 5 years), you’ll be rewarded with interest. While great for impulse spenders, term deposits are notoriously inflexible — you can’t add extra deposits, and if you need to access your savings in an emergency, you often have to wait a few days or pick up a penalty fee.
2. Put your savings in a different bank account
Keeping your savings separate from your spending money is an age-old budgeting method. Many people would set up a savings account with a different bank, so that they’d be forced to wait 1 or 2 days whenever they wanted to transfer money out. But now that most transfers between banks are instant, this doesn’t work anymore.
So far, you can choose between never touching your savings again (well, for a year), or accessing it whenever you want. We thought — surely there’s a better way to stop yourself from spending, without locking yourself into a term deposit? So this is what we built:
3. Choose someone to stop you from spending
At Wildcard, we’ve recently introduced a feature that lets you choose a trusted friend or family member to protect your savings account. Whenever you want to take money out, your “Defender” will receive a message asking them to either approve or reject your transfer. By adding some friction to the transfer process, you might reconsider whether you actually need to spend money at The Iconic, and save the money instead.
If you’re interested in learning more about Wildcard, you can check it out here.
This article is general in nature and doesn’t take into account your financial situation, objectives or needs.
