Debut is building a new kind of bank shaped by Kiwis, and recently invited our user community to tell us about how they organise their money and plan ahead after they’ve been paid. We wanted to learn what people are already doing and what challenges they face.
We’ve heard from some Kiwis we’ve spoken to who already have their own methods for organising and setting money aside for important bills, like rent or mortgage payments, but wanted to find out more about the processes that Kiwis currently use, if they’re working well and if there is any room for improvement.
We sent out a survey. 📋
The survey confirmed that when money is received into someone’s account, roughly half of the respondents “process” that deposit in some way, and the other half either did nothing or didn’t say. Basically, of those who process their income, some transfer money into “envelope accounts” to set it aside for future outgoings, or they may deposit money into a separate expense, savings or investment account. The diagram below shows how most people shift and split money after it is received into their account. While not everyone pays money into a separate account for expenses or mortgage, there are many who do, which is why it is shown on the graph. Also, not everyone is diligent about saving and investing, but these are generally considered to be good practices – see our article on The Best Money Management Tips for Beginners.
What are Envelope Accounts?
When we talk about "Envelope Accounts," we're referring to how some people have separate accounts set aside for things like “rent” or “mortgage payments.” People often do this if their pay cycle does not align to their bills, e.g. if they are paid monthly or weekly. This system of putting money aside for a specific purpose is based on the “envelope method.” We call this the envelope method, because it’s not that different from the way that our grandparents might have sorted cash into envelopes to set money aside to pay the gardener or a bill that isn't due yet. Small business that rely on cash, might pay employees in envelopes at the end of the day too.
All of this moving of money can be complicated to get right. Setting up automatic payments is helpful for moving money into the right place, but limitations around which accounts you can transfer to and from, along with unknowns regarding how much you’ll have left over after paying your bills can make it tricky to set up the perfect system. 75% of people surveyed expressed that they don’t use automatic payments to schedule transfers, and qualitative data in user comments confirmed that at least some Kiwis consider limitations as a factor for why they don’t use automatic payments.
Another problem more than half of people surveyed ( 61%) found that they are not fully aware of all their outgoings, including direct debit amounts and when they’re due. Not knowing how much money you’ll need to cover your expenses can make it challenging when you’re trying to set money aside for important things like savings, investments or the Apple AR headset. 😎Overall, about two-thirds of people surveyed (65%) expressed dissatisfaction with how they currently coordinate their income, which means there must be a better way.
Personally, I love a good spreadsheet, but I also know that it can take quite a bit of tinkering to get it working the way I want, and realistically, that’s not really everybody’s vibe. With Debut, we want to leverage technology to make money tasks that seem momentous or monontonous much more manageable. In other words, we want to make organising, planning and saving money effortless for everyone. That’s why we’re building a new tool into Debut we’re calling Money Maestro.
Introducing Money Maestro 🪄
Money Maestro is a whole new way to instantly organise your money with just a tap. We’re already building bill detection into Debut to recognise and automatically plan ahead for future billers, and put this feature to use inside of Money Maestro to help you figure out how much you need to put aside for expected expenses. You can even set some spending money aside for some fresh kicks. 👟 And don’t forget to pay yourself first, Money Maestro allows you to choose a percentage or set a fixed amount for how much you’d like to transfer. Set it up once, and Money Maestro will remember your settings. So, the next time you receive money in your account, just sort it with Money Maestro and presto; your pay is perfectly portioned. ✨
Psst. Want to try Debut?
Debut is launching a little later this year. If you have already signed up for our waitlist, please consider sharing Debut with a friend using the share buttons at the bottom of our newsletter. Sharing helps you move up the waitlist so you’ll get to try Debut ahead of time. Also, when you join the waitlist, you'll get the chance to join our community where your feedback helps us make features like Money Maestro even better.
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Please note, Debut is not a registered bank under the Banking (Prudential Supervision) Act. This is about our future intentions. Investments with us are not supervised currently by the Reserve Bank of New Zealand.
