Expense Tracking. It’s all the rage. All the cool kids are doing it. I’m doing it. GoPro is strapping cameras to professional, extreme expense trackers and calling them heros. Google changed their logo to read “Googlexpensetracking”. Kanye West commented that expense tracking deserves a Grammy.
So since we’re talking about tracking your cash anyway, let’s chat with 22seven, and the brainy people behind the web app that tells you where your money is, and where it’s going. 22seven drags data, kicking and screaming, from the bowels of your bank and categorises all of your income and expenses, in pretty graphs.
We sat down with 22seven and interviewed them. Okay, that’s not entirely true. I sat down at my computer in my pajamas and sent them an email, and then they sat in their pajamas and wrote one back. Sorry, but that’s just how interviews work now.
WellSpent doesn’t get any financial benefit from recommending 22seven. We just think their web app rocks.
Well, there are a lot of reasons for the “why”. The main one is that hardly anyone feels they have enough money. If that’s the case, there are two options. One, make more money, which is hard. Or two, do more with the money you have.
But there are other reasons. For one thing, there’s technology and what it can offer. So much has changed and improved thanks to technology – education, transport (think Uber). There are fitness apps, communication obviously. But when it comes to money, for the most part we still pretty much do things the way we did 20 years ago. Yes, we bank online or on our phones, but those are small, bare minimum, incremental steps that just about keep up. Why haven’t we used technology to radically change money? So there’s a gap there to fill.
The other thing that’s changed is around the psychology of money – how we think about it and behave with it. Major traditional economic theory, which has shaped the world of money, assumed that people are perfectly rational and make perfectly rational decisions with their money. But in the last few years, that assumption has been challenged and shown to be false.
The field of behavioural economics is changing our understanding of the way we all are with money, and the bottom line is that we are very often irrational and emotional with our money. So we think there is also a gap for someone to help people with that – to make them aware of how they – we – everyone – shoots themselves in the foot financially, and to help them “do money better”, to make better money decisions.
As to the “what it is that 22seven does”, well, there are specific ways that helps people see, think about and use their money better. Some of those ways are:
That kind of information is usually very dry and alienating – think bank statements. Or it’s inconvenient – think about having to collate and record all your invoices and receipts, etc. And also there’s often a lot that’s missing or hidden or misrepresented traditionally – for example your banks tell you what your available balance is, but that includes money you can borrow, which the banks want you to do, because you have to pay it back with interest.
So the way 22seven shows you your information is about making it accessible, convenient, useful and honest.
It’s accessible because it comes from all your money stuff, not just one account, and because it’s presented in a way that is actually pleasing to the eye and easy on the brain. It’s convenient because it saves a lot of “manual labour” – it’s automatic. It’s useful because it shows you stuff you might not otherwise see. And it’s honest because it shows you exactly what you have, what you can access, what you spend on what.
The other way transactions are sorted (other than into categories) is into what we call spending groups. Those are day-to-day expenses, recurring expenses and exceptions. And there’s thinking behind that, which is: day-to-day expenses are where our impulse purchases are. It’s the coffee in the morning, the chocolate in the supermarket aisle, the pair of shoes we ”must have”… these are expenses we don’t give much thought to, but they add up fast. So by showing people how much they spend on those things, 22seven makes them aware of it and encourages them to change. Then there are recurring expenses – usually monthly.
Here, a single decision can make a massive difference because one change benefits you every month. For example, you pay for a gym membership but you never use the gym. So you cancel the contract and save a few hundred rand each month. Just seeing that expense there, and the lack of value you’re getting from it, is really powerful. By the same token you might look around for cheaper insurance, or move to a smaller flat, or cancel your satellite TV. And then there are exceptions, which are things you don’t expect (car breaks down) or which don’t happen often (holiday), but which can have a massive and sudden effect on your money.
Well, there are several parts to that. But the biggest one is that it’s about awareness. In other words, the information itself is just the ticket to the game; it’s not an end in itself. The real deal is what that information means to you, and what you do with it.
Seeing things in new ways compels you to think about things in new ways. And when you think differently, you’re more likely to act differently. You see, you think, you act. But, shown in a meaningless or boring or old way, usually it just stops at seeing.
Numbers on a bank statement are just numbers on a page. When they’re shown in a different way – or with different context – or even in different colours – they can switch things on inside your head. And that’s more likely to lead to action.
We have honed it and we continue to. If we can take something that took 30 seconds and make it work in 7 seconds, that’s a massive difference. But then we want to get it down to 3 seconds, and then 2 seconds. Those little improvements all go a very long way. So we’ve gotten a lot better, but we intend to get better still.
Same with the product offering; we keep saying we’re only 30% there. Two years ago we were only 30% there. Two years from now we’ll still be 30% there, because we keep thinking about new things we can do and things we can do better.
So where it’s going is more, newer, smarter, more helpful ways for people to use their money better; different ways for our customers to get new insights into how they use their money. Also we’re starting to focus more on how people can tangibly act on those insights through 22seven – not just by making better decisions and changing their behaviour, but by actively helping them do the things they really want to do. For example, we’ll be offering investment products soon.
It’s not so much about things like “people spend, on average, x amount on food every month”. It’s more individual – “whoa, is that how much I spend on food every month?” The lessons we’ve learned are seeing, time and time again, how a little awareness can go a long way.
Sometimes it’s people realising for the first time how much their bank fees are costing them, and so they change accounts, or banks. Sometimes it’s about how much things are really costing them – for example, when you put car loan repayments, petrol, insurance and maintenance together, you might rethink the kind of car you’re driving, or whether to own a car at all. Those are all real benefits that people have got out of 22seven. And they’ve all started with a change in awareness.
A million thank yous to the brainy people at 22seven for hauling themselves out of bed in their jam-jams to tell us about what they’re up to. I’m using 22seven to track my spending right now, and it’s going swimmingly. I heartily recommend you give it a try. Also, drink a big glass of water right now. It’ll be good for you.