In this article you’ll learn:
● How hard it can be to save for a rainy day
● What are chatbots and how they help you manage money
● 3 savings apps that use chatbots
Can a chatbot help you manage your money?
Well, if you use a chatbot savings app, the answer is yes.
Most of us use smartphones, and these chatbot savings apps help those (like me!) who are not so financially savvy and require an extra ‘nudge’ to ensure they put some aside for a rainy day.
Saving for a rainy day, ah, it’s easier said than done. As a father of three, I often ran into financial problems each month. I’ve tried following strict savings advice but ended up saving little to nothing. But, why?
Well two reasons. I was not disciplined enough to put money aside, and never calculated how much I was financially able to spend each month.
Then at the end of 2016 I stumbled upon a BBC article about how chatbots and savings apps can help you save a little each month, eventually accumulating into hundreds of pounds saved.
Initially sceptical, I tried several apps, namely Plum, Cleo and Chip and soon found that within a few months I had saved more than when I tried to manage it myself. These savings apps plug into your bank account and analyse your spending, then moving money into an savings account that pays interest. I started with £10 per month – and eventually increased it until I had several hundred by the end of 2017.
I had done it, I saved for my rainy day!
And you can too!
What are Chatbots and how do they help you save money?
Chatbots are one-to-one conversations providing recommendations based on your ‘chats,’ assessing and analysing your user data.
This may sound scary when you think about it – sharing your data with a machine – but it is no different than sharing your data with Facebook and then seeing “pages you may like” or “friend suggestions” – these are all based on you agreeing to share your personal data.
Once your data has been analysed, the bot can provide valuable advice and recommendations and build a personalised and meaningful relationship with you.
So how did a bot help me manage my money?
Well, bots use algorithms that analyse your spending patterns, compare them with forthcoming income, and calculate what cash you don’t need – they will then “chat” with you to advise how best to manage your money, telling you what to save and what you can afford – hence the name chatbot.
But which chatbot will help you to better manage your money?
Well it depends on what app you use, what access you want to your savings, and how much interest you want to earn…
3 of the Chatbot savings apps on the market
To help you get started, here’s 3 chatbot savings apps to help you start saving immediately.
Plum is savings chatbot that lives inside your Facebook Messenger and helps you start saving small amounts of money by connecting your current account and reading your spending habits. Plum then deposits small amounts of money every few days into a peer-to-peer savings account that pays 3% interest. Should you wish to withdraw your funds, they will be paid to you in 4-5 days.
The concept behind Plum is that it examines your spending in the last year and predicts how much you can afford to save now and in the future.
Plum utilises Facebook Messenger so you don’t need to download an app. With many smartphone users using the Facebook Messenger App, the chatbot will chat with you as your daily savings assistant, the same as if you were chatting to friends and family.
Cleo, like Plum, is hosted within Facebook Messenger and lets you interrogate your bank accounts and credit card data; allowing you to view your balance, check direct debits, latest transactions, and view your spending per category. Cleo aims to help you keep track of your spending and hopefully budget better.
The service connects to your bank account to make calculations about your finances, and lists where you are spending in different categories (including eating out, groceries and transport) to sending you messages about how much money you should spend each day.
Plus, Cleo can help you find better deals with banks, to stop you overpaying on credit cards or to get a better interest rate on your savings. It lists which bills you still have to pay each month too. Cleo’s savings account does not offer any interest but you can withdraw your funds instantly.
Chip connects to your online banking, analyses your spending and calculates how much you can afford to save without having an impact on your day-to-day spending. That money is then automatically moved every few days into a Chip savings account, which is in your name and hosted by Barclays bank (an account will be opened for you).
The interest rate on your savings is 1%, which is less than Plum (more than Cleo) but you’ll be able to break open your savings instantly.
Mobile banking increases year on year – yet the high street banks offer little or any advice or tips to help you manage your finances. Chatbot savings apps helped me to put a little aside every few days because they did the saving for me.
Not being disciplined enough stopped me putting money aside because I was keeping it in case I needed it (yet ended up spending it). However, by using a savings app my chatbot calculated how much I was allowed to spend and even congratulated me when I saved!
Whether you prefer using Facebook, or require instant access, or even wish to earn interest on your money – there is a chatbot savings app for you.
Now, the main question I ask my chatbot is “how much each week do I spend on beer?”
I won’t tell you the answer!
David Bailey-Lauring is a small business owner and dad of three, from Brighton, UK; he writes about tech, finance and entrepreneurship.