November 29, 2009 | Category: Uncategorized


Many financial experts will tell you that when you save for something that it should be goal-oriented i.e. that it should be for something in particular. There are a number of things in the course of, say, a year that are worth saving up for, where there are no pay-monthly options, or those options come with particularly punitive rates and fees (I’m thinking various forms of insurance, bills etc). There are also usually items that people actually want to save up for: new cars, new furniture, new televisions etc. Whatever they context, people often want to save amount X for item Y by date Z.

In an ideal world, we’d all be excellent planners. We’d be able to set aside the right amount of money each month without any prompting, never dipping into it for other things unless absolutely necessary. In our far from ideal world, we’re not all great budgeters. People frequently pay for item Y from the last source of funds available to them before date Z.

It occurs to me that saving accounts could be a lot smarter in order to facilitate these kinds of transactions. For starters, let users deal with savings in the terms that they actually think. Rather than just being big pots that you move your money into, they should allow you to create many smaller but specific pots: one for each of the items that you are saving up for, with a label so you know exactly what it is for. The savings account should also let you specify how much is needed in each of these pots and the date by which you will need to have reached your goal. That means that at any point in time, you can then see exactly how close you are to achieving your goal.

Let’s go further: give the option of figuring out exactly how much you need to save for each item each month in order to reach your goal on time. Allow the user to automatically transfer that money in each month.

By modelling a savings account in the way that it would actually be used, you can facilitate much better user interaction. Rather than having to work out how close they are to a series of goals over a number of different dates, the account does the work for them. That’s a good thing.