Why A Weekly Spending Target Is The Best Budget To Have

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Creating and sticking to a budget can be hard. If you’ve ever felt too intimidated, too anxious, or too lazy to budget your money, you’re not alone. That’s why we challenged Qapital’s team of behavioral economists to design a more simple, more effective way to budget. The results? We’d like to introduce you to our Weekly Spending Target feature.

Do you ever contemplate what you should spend instead of what you could spend on a regular basis? A sustainable budget will comfortably pace the spending of your paycheck. But harmful budgets that encourage you to overspend (paying money you don’t have or need for unnecessary expenses) or underspend (limiting your ability to sustain the quality of life you deserve) hold you back from financial freedom. If you don’t feel balanced or in control, then you can’t be honest with yourself about your money.

That’s why we designed our Weekly Spending Target to let you customize a budget that fits your spending habits and income. It will automatically send you notifications that keep you updated throughout the week so you always know how you’re doing. You can adjust your target amount at any time so you have the flexibility to learn and grow with your spending habits.

How are we so sure we’ve made smart spending easier? Because we asked our Chief Behavioral Economist, famed researcher and professor Dan Ariely. If you have budgeting questions, he has the answers—and we built our Weekly Spending Target with those answers.

Qapital: Why should a budget be weekly? Why not set it monthly or yearly?

Dan Ariely: “If we have a yearly budget—let’s say $50,000—we’ll run out of that money way too soon. A monthly budget makes sense for some things—it fits the bill of rent and so on—but most of our discretionary expenses* are either weekly or daily.”

“We certainly need a monthly budget for monthly expenses—rent and so on—but for discretionary spending*, it’s much much better to have a weekly budget. In fact, some studies show that even if you have a two-week budget, people spend way too much in the beginning and don’t have enough by the end. So if we want to spread our money correctly, the right framework is to think about a week.”

Q: When should the week start?

Dan Ariely: “Should the week start on Friday or should the week start on Monday? Well, on the weekend we have more discretion. We can expand our spending [because] there are so many more things to do on the weekend. In fact, when you work, life is quite cheap; you don’t have enough time to spend all your money. But on the weekend, when you have more [free] time, you can expand your spending dramatically. It’s something to look forward to.”

“So what’s the right approach? If our week starts on Friday or Saturday, we end up spending way too much on the weekend and are left with no money by Wednesday or Thursday. But if we start on Monday we save some of the money because we want to keep it for the weekend, and then if we don’t have that much leftover it’s easy to shrink our amount spent over the weekend.”

Q: Should my budget have categories?

Dan Ariely: “The answer is yes only if you’re perfectly rational and if you enjoy budgeting. While it’s reasonable to have a budget for multiple categories, most people won’t stick to them. You don’t want to go for something that’s perfect, you want to go for something that is doable. For that, I recommend the strategy of creating one budget for all your discretionary spending.”

“Think about all the things you could live without. For example, grocery shopping is not one of those things. You can’t live without food. But take all the things you could live without, put them in one bucket, then think about what amount you want to spend on that category per week—coffee, drinks, going out, entertainment—and then think of that as a separate category, as a holistic category, without breaking it into components.”

The Weekly Spending Target tool is available only for users with a Qapital Visa® Debit Card. Sign up for a (free) Qapital Spending Account today and set a budget you can feel confident about.

This interview has been edited and condensed for clarity.

*Discretionary spending: non-essential purchases for things like leisure and entertainment.

 

 

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The Inspiration for our New Product – Qapital Spending

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Written by George Friedman, CEO.

At Qapital – we spend a lot of time thinking about people’s relationship with their money. About how the way people are wired affects the way we manage our money. And about how human nature shapes our financial decision-making (sometimes for the better, sometimes not).

It’s why we design our products in tandem with Behavioral Economist, Dan Ariely – who helps us find ways to make the act of saving more successful. Like having people save for specific goals, instead of generic savings accounts. Or having people upload custom photos for their goals – because we know that when people can see what they want in front of them, they save 2x more.

By combining behavioral economics and technology, we built an app that turned people into great savers by making saving easier and more motivating.

Today, we’re taking that same philosophy a step further with the launch of “Qapital Spending” – a checking account designed to help people spend more intentionally, and reach their goals even faster.

This means that Qapital is moving from a simple savings app, to a more holistic goal-focused personal finance platform. Or – in human speak – a new way to bank designed to help people put their money towards the stuff that matters most.

Now, with the addition of Qapital Spending, users can better monitor and manage their weekly spending and savings habits in real-time. They can automatically puts a little away every time they swipe – making saving for their goals a daily, automatic habit. Qapital users even get helpful notifications about how much they’ve saved and track progress towards their goals.

Just like traditional banks, Qapital lets people send paper checks, set up direct deposit, even earn interest on their account balances. But UNLIKE banks, Qapital has no monthly fees, no minimums, unlimited transfers and more. So basically – the stuff you need, without the stuff you don’t.

It’s the next step in our effort to create a better banking experience. One that helps people not only manage — but improve —  their financial lives. One that’s less frustrating, and more fulfilling. One that helps people get the most possible happiness out of their money.

And the best part, is this is just the next step. Much more to come in the next year.

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