For the love of money

In a world where talk about money is front-page news day in and day out, what do people on the street think about their own money?

My friend Jacob Garber, of Participle, and I decided to spend some free time finding out. We spoke briefly to 5 people that we met on the streets of Central London, all between 30 and 60, 3 men and 2 women. We asked them how they spent money on a daily basis, how they managed their money to make sure they always had enough at the end of the month, if and how they saved, and what they spent it on. The radar plots below sum up what each of our respondents told us.

Radar plots summarising our respondent’s attitudes to money

This kind of guerrilla research is a useful technique to quickly (and cheaply) gather a little understanding on a topic. It can’t be expected to tell you everything you need to know, but it does make a good starting point. In this case, there were a couple of things that stood out to us. You might recognise something of yourself in these stories!

1.”If I have cash on me I spend it.”

Of the five people we spoke to only Mike (names have been changed), a 53 year old social care manager, uses cash for day-to-day spending. His friend Eric, 49 and also a social care manager, uses his card for most purchases, though he typically has £50-£100 in his wallet, which he doesn’t consider a lot. This is well illustrated by these photos of our participant’s wallets.

Small, thin wallets, sized for cards, not cash

Most are small and thin, designed for cards rather than cash. As Eva, a 32 year pastry chef, told us, “I draw £40 max if I do cash, because I sort of know the limits, like £40 you know more or less is not the end of the world.” Cash comes in handy in situations like pubs where many transactions will quickly follow each other, so evenings out were mentioned as the most likely prompt for a trip to the cash machine.

2. “Apparently a jar filled with 1 kilo of honey equals to €700!”

This change from the physicality of cash to the abstraction of a bank card makes understanding how much money you’re holding a little more difficult. Alex, a 32 year old set designer, told us how he only started using a card when arriving in the UK to study. At home, he found putting €2 euro coins into a glass honey jar could quickly add up, and used this method to save for holidays and his first car. Such tactics were mainly used by the two 30 year olds we spoke to. Older respondents, with more stable incomes, had less need to pay close attention to spending on day-to-day items.

3. “Don’t spend more money than you have.”

Perhaps the obvious advice comes from Eva, who told us simply, “Don’t spend more money than you have.” A quick glance back to the newspaper is all that we need to tell us this is easier said than done! Our respondents had a variety of ways to keep their accounts in the black, but they all related to ways of keeping things simple. Eva for example keeps to a weekly schedule, which means she can keep track of how much she spends (and can afford to). Eric, whilst more comfortable enough with daily spending to not need close attention at the grocery store, allows himself only occasional luxuries (like an electric guitar) and is by default cautious about big-ticket items like holidays or cars. Alex checks his balance online once a week or so.

Whilst we should be careful about taking such discussions as straightforward representations of how people manage their money all the time, the way people talk about money is nevertheless a helpful start to thinking about designing better financial services, and also financial education.

You can see hints of such insights in services such as Lloyds TSB’s Money Manager or MyBarclaycard’s automatic categorisations of spending.

Lloyds TSB’s Money Manager helps you understand what you’ve spent

MyBarclaycard automatically categorises all your spending

However, our 5 respondents didn’t speak about money in terms of past spending wasn’t front of mind for our 5 respondents. Their spending behaviour was more timely. They focused on daily activities and potential spending. They were concerned with choosing how to spend (or not spend) better.

Some obvious ideas that spring to mind are things that help you have a more physical relationship with your money or help you divide it up into pots for future spending. BankSimple’s (US only) Safe-to-Spend total is an example that starts to get at this type of feature but could do more to help you think about what you should spend in order to achieve longer-term financial goals.

BankSimple’s Safe-to-Spend total subtracts pending payments from your total

Given the state of the economy, it’s not surprising that money is very much on people’s minds, and even quick and simple research highlights plenty of opportunity for people-centred money services. If you’re interested in learning more about our day looking in people’s wallets and some of the ideas that came from it, or think your own challenges could benefit from such approaches, please get in touch.