Playing with Psychology in Saving #Hari2Jenius
Financial management is quite a hard work for some people, especially for those who are not used to manage their funds in earlier age. When I was a student, I was quite good at managing my pocket money. Therefore, I was able to buy stationeries, comic books, and my own necessities without even asking more money from my parents. I was aware about saving and financial management at the early age. However, as a grow up I couldn't handle my financial condition very well. I managed to save some money but I didn't invest. At some other time, I lost control in managing expenses which make me somehow getting skint later day.
I was struggling in finding the right way to manage my expenses and income. Fortunately my friend introduced me to Monzo when I was in UK. This challenger bank provides a budgeting feature which at least helping me in managing money. Although, the budgeting feature will be more helpful if it's completed with alert or notification if I started to get over budget just as I have wrote in this article. Monzo also has a "POT" feature which allows you to do daily saving or simply separate your balance from your current account to prevent more expenses. Through their article, Monzo introduced a way to consistently saving for a person who finds it quite difficult to save their money (1).
Apparently the 52-week saving challenges contributes an idea for me who tried to manage my spending well lately. For these past months, especially when I have held sum of money from salary, I have experienced a total mess. For the hundredth times in my life, I lost control of my financial budgeting and barely have any savings or investment. Thinking that I might having trouble in the future (and I already have) because of my bad financial management, I swore to myself to start implementing my knowledge to my own spending management.
The idea of starting daily saving fortuitously supported by Jenius Connect as my main current account in Indonesia. This BTPN's virtual bank offers Monzo's helpful feature as in POT. Jenius' saving feature: Flexi Saver and Dream Saver are currently my saviour as saving options. By Flexi Saver, I could at least reduce the desire to spend my account balance. Since I moved the actual balance to Flexi Saver, I couldn't easily withdraw the balance everyday unless I desperately need it to buy something or topping up my virtual wallet (Go-Pay, OVO, Link Aja).
|Jenius Home Screen|
|Jenius Flexi Saver feature|
Psychologically speaking, when you see you're low on balance you will hold yourself on spending too much. This related to Behavioural Economics theory in Salience and Prospect Theory. Salience means an individual will only focused on prominently displayed information (2). By exploiting salience effect, me as an impulsive spender will focused on the displayed balance in my account. The less balance appeared on my Jenius account, the less I would spend it for unnecessary needs. Somehow this bias is helpful to decrease overspending budget. Behavioural scientist utilises Salience bias as a call-action button in decision making which I think it works for me as well in my case (3).
Beside Flexi Saver which is helpful to control spending desire, there is another feature to optimise saving and spending control: Dream Saver. In this feature, the customer will be able to create a saving to achieve a goal e.g: Travelling, Saving for Concert, etc. I make use of this option as tools for daily saving and challenge myself to consistently saving without making any withdrawal. The distinct different between Flexi Saver and Dream Saver is the possibility to withdraw saving. In Flexi Saver, I could easily withdraw the funds anytime. Meanwhile Dream Saver won't allow the user to withdraw saving if the balance hasn't reached the targeted amount. Dream Saver is my current saviour because I can't do anything if I don't have any active balance left in my account.
|Jenius' Dream Saver|
|Jenius' Dream Saver auto debit feature|
Jenius' Dream Saver not just prevents me from making unnecessary withdrawal, it helps me to save regularly by utilising its auto debit feature. Implementing Monzo's 52-week challenge, I set Dream Saver to regularly deduct my active balance. Again, I can't do anything about it unless I pause the auto debit service. Without realising that I automatically make saving everyday, I didn't feel burdened in saving. I don't need to save monthly or weekly in a huge amount of money and I don't need to worry about how much money left to save. To be honest this auto debit feature is also psychologically helpful for those who usually forget to allocate savings.
My current saving behaviour happened since I read an article regarding effective financial management couple months ago (4). There were rules to encourage saving discipline, it is said that "Prioritise saving not otherwise, save the left-over" (5). To control your investment and saving, it is better to allocate saving first before spending not otherwise. Mistakes that almost everyone does is budgeting for their spending first then save the rest. If you reverse the process then it will be useful for controlling impulsive shopping which again works for me. This month, I am gradually able to hold my impulsive behaviour in shopping or snacking which usually became my unexpected expenses. This method also successfully nudge me to be more discipline in reducing unimportant go-food order or groceries shopping.
Will you try this psychological experiment? Who knows perhaps it works for you as well.