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Virtual SNL "Don't Buy Stuff" Financial Coach

As more transactions go through smart devices, we can add a financial coach linked to your bank/credit cards to automate & help decisions.

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Who does this idea benefit, who are the main players and what's in it for them?

We're absolutely in a consumerist society where people are encouraged to buy stuff, and retail therapy can override our decision making skills. See this SNL skit: http://tinyurl.com/qaopztz But what if when you went to checkout from a store using your phone, your phone said "no" because it knows you can't afford the purchase. This benefits consumers, limiting their debt, and banks by improving customers' credit.

How is your idea specifically using the power of communities to improve financial opportunities and resources?

This idea is really about changing a community value: don't buy stuff you can't afford just because advertising makes you want it. Be aware of what you're purchasing. I don't see a clear idea yet of how to integrate this with a community in a positive fashion, but perhaps it'll inspire someone else.

What early, lightweight experiment can you try out in your own community to find out if the idea will meet your expectations?

I could imagine a prototype app that knows the balance of your checking, savings, and investment accounts (and ideally credit card balances/limits). You could ask if "can i buy something that costs $X," and it gives you a yes/no answer based on not just immediate balances but debt, what you should be saving, etc.. A next step would be having the app help you make a savings plan to save up to buy the item, perhaps even tied to a coupon hunting site to help you find the best deal when you can buy.

What skills, input or guidance might you be seeking from the OpenIDEO community to help you build out or refine your idea further?

How could this work with a community? How could this be effectively implemented for someone who doesn't use Apple Pay/Google Wallet for purchases? What are the right incentives to get people using this since it won't be enforceable (just pay with a regular credit card)? Would it be feasible to have a special credit card that requires showing a "yes" answer to the cashier when using the card?

This idea emerged from:

  • An individual

As payments become virtual--or at the very least people often have connected devices with them most of the time--how can we add a financial intelligence layer that's linked to payment processing?  Could there be a little voice that actively tells you "don't buy this."  Hopefully this will implicitly shift people's thinking to consider if they have the funds to purchase something before doing so rather than indulging in retail therapy and wild debt.

There are some potential use cases for the system, especially if it could evolve beyond a simple in-the-moment yes/no system to a smarter financial coach.  All use cases are an ideal world where the app's connected to your savings/checking/credit card accounts.

- The first use case is the always-on financial coach.  People often don't know what the right, smart behaviors to set themselves up for financial success are, and instead of trying to teach everyone, why not codify it and have it done for you? A basic feature might be automatically transferring money to your savings account when you deposit a paycheck and automatically making payments to your credit cards, helping to pay off any debt.  To encourage people to really dive into these features, this could be connected with my gamification idea: https://openideo.com/challenge/financial-empowerment-challenge/ideas/gamify-finances-to-encourage-positive-beahviors

- The second part would be making the coaching be in-the-moment, linked to payment processing.  This is when I'm in the store and considering buying something, the app tells me if I can/can't afford it.  And when I'm checking out, the app can give me a warning if I'm buying too much and possibly even prevent me from completing the transaction (like declining a credit card) if I'm taking on too much debt.  

Ideally this logic would be more than just "do I have enough money in my account and credit on my card."  For example, if it's Thursday, the backend knows I get paid $X every Friday, and there are 3 Fridays until my card payment is due, then it should know that yes, I won't need to take on debt to buy this (or that if I do take on debt, I can pay it off easily).

To put this into human terms:

John is fresh out of college, and while he has a basic idea about finance (spend less than you make), his parents have often helped with his bills, and he figured he deserved that large TV as a graduation gift to himself even though he has to start paying back his student loans.  Fortunately he has a job at a daycare, helping with early development.  Unfortunately this job is pretty tiring, it doesn't pay amazingly well, and he spent his time in college thinking about early education, not finance.

He sees an ad for $Coach and downloads it, taking a few minutes to enter his bank account, credit cards, and student loans.  (Ideally he just points his phone's camera at a check and his cards to capture a lot of this information.)  $Coach thinks for a second, doing data analysis of his accounts.  It recognizes he has a new job, for example, and that his income in the future will vary.  $Coach then asks him a few questions, like if he has any specific goals he wants to start saving for now (like a vacation).  

$Coach then suggests a basic plan for him to continuously transfer his income to pay off debts and to save.  Like Wealthfront has automated many sophisticated parts of investing, $Coach could codify knowledge like "if the interest rate on your student loan is 4%, pay the minimum on it and invest the remaining money in a market fund.  If the interest rate is higher, pay it off sooner."  $Coach might also have various banks/investment funds/credit cards as partners and be able to suggest smarter choices for John to switch to (and make it push-button simple to do so).

Whenever John has a financial question, he could use $Coach.  For example, maybe he wants to buy a car.  $Coach could show him information on auto loans, help him get the best rate, and then tie that debt into his overall plan.

The more John uses $Coach, in addition to helping his overall financial well-being, he's rewarded with points and badges, and he sees himself rising in the $Coach leaderboard.  With barely any work other than consulting $Coach about anything financial, John's becoming more financially savvy, and others know it, too.

A great feature is $Coach's in-the-moment buying help.  When John's in a store, he points his phone's camera at a product's barcode, much like RedLaser and similar apps.  It pulls up the price in the store along with any coupons along with if item's cheaper elsewhere.  But, there's a new section at the top of the screen, displaying if John could/couldn't buy this right now.  And if John forgets to do this in the moment, when goes to checkout and pay with his phone, again like how credit cards can be declined, $Coach can intervene and decline the transaction. (Or perhaps $Coach is dynamically adjusting the purchase limit on John's card so that the card actually does get declined.)

But, if John can't buy something, $Coach prompts him to add it to his saving plan, so that when John has the money, $Coach lets him know he could buy the item.  $Coach could even continue to track the item's price, looking for any sales, so that between John's savings and the price dropping, he might be able to afford it sooner than expected.

Over time, $Coach continually and automatically does the best financial practices for John, and without thinking about it, John is setting himself up for success throughout life.

Stay tuned for $Coach 2.0, which will help John deal with major life events, like getting married and having kids.

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Great idea! I'd also like to see this applied further afield to the likes of governmental institutions and larger corporations. Akin to a war-torn Europe with resources scarce on the ground, people didn't spend more money than they had because they couldn't, and their country couldn't afford it. Flash forward 70 years and a culture of "debt" has enveloped modern societies.

While somewhat an obscure reference, this idea embeds a different cultural norm whereby the individual is led to feel more responsible for the money he or she spends and can see where that money goes rather than knowing their account is somewhere in the plus or minus for the month. I agree with some of the other commenters, there would have to be a clear line of credit and debit (especially with online transacting as certain sights charge you for credit cards and others mandate it's credit card only). Likewise, the individual should have a clear understanding of what their costs of living would be relative to their expenditure. This would offer a dual benefit, by helping the individual create a secure credit score and monitor their spending habits.

Brilliant stuff, it would be interesting to see this primarily developed for a small control user community and then standardised for wider consumption.

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