A Spotify Wrapped-style view of personal finances could help users visualise spending, reduce stress, and make smarter money decisions.
Spotify Wrapped is a fun yet insightful occasion that lets us learn a bit more about everyone’s audio tastes. The platform creates fun visualisations of users’ music and podcast trends, compiling them to provide insights such as the most-listened-to artist, favourite album, and must-have podcast. We get to see, via a few swipes, a colourful breakdown of our past year on Spotify, and then we can share these on social media with friends. This is part of Spotify’s social aspect, which has helped make it such a massive platform with millions of users.
However, what if we could do the same with our finances?
Many fintech solutions offer insights into spending and investment patterns. But none go as far, or as loud, as Spotify does with our music. This could be a great way of visualising our relationship with money and go a long way towards demystifying it.
Finance is often a source of stress for people because they don’t understand it. This is a world shrouded with acronyms and jargon, which can all be very confusing, when in reality it’s pretty simple. But if people were armed with better insights and a more precise, simpler understanding of how their money worked, then logic suggests they would be better placed to get started improving their situation.
A financial “unwrapped”
Hypothetically, a financial unwrapped could look like this: you go to your most-used fintech app, a money management solution, or a bank. This has a new notification for you to open: your first financial unwrapped! Using API technology, this has sourced data from across your economic and digital footprint and created a bespoke visualisation of your financial year.
Like the way Spotify Unwrapped begins with how many hours (or days and weeks!) of music you’ve listened to, your financial unwrapped would start with the big numbers. How much income have you received and from what sources? And then, on the flipside, how much have you spent? This would initially give you a straightforward yet important metric: are you in profit?
Then the financial unwrapped would go deeper and break down how you’ve spent your money. This would be segmented into needs and wants—with the former comprising how much you’re paying on utilities, rent, food and so forth. The latter would be the stuff we buy but don’t need—dinners out, holidays, designer clothes, etc. This could all be further refined into categories and subcategories. In the same way, a Spotify Unwrapped identifies your favourite artists and podcasts; the same could be done for your most used merchants.
Then, once you have this data, you could start to use it.
The importance of financial insights
Spotify Unwrapped is just a bit of fun, and doesn’t come with any judgment (except what your friends may think about your taste in music). Though a financial unwrapped wouldn’t pass any judgment on your finances, it could be invaluable in helping to improve your financial situation.
The current cost-of-living crisis makes it very hard to save money, and, to some extent, there isn’t much we can do about the cost of some things—such as heating—increasing due to inflation. However, many of us don’t realise that by making a few tweaks to our ongoing financial behaviour and how we spend our money, we can make a difference.
Exploring your current fintech apps’ insights can be extremely helpful for this, and if you can get a fuller understanding of your finances, here are simple ways to improve things:
- Spring clean your direct debits: Check for any costly, unused subscriptions you can cancel (gyms, websites, newspapers, etc.). These can be culled.
- Consolidate your debts: Some of your direct debits may be regarding credit cards or loans you’ve taken out – take control of these and explore debt consolidation, or even 0% credit card. These options could help you pay off debt more efficiently and at a lower cost.
- Block notifications and emails from your favourite shops: Spending too much on certain merchants? Give yourself some distance and do your best to ignore their offers and discounts.
- Eat in more: Eating out is great fun, but if you’re spending a lot on meals out, then add up how much you could save by cooking at home instead. You can still eat great, tasty food, but do so with less impact on your finances.
- Use online shopping: Shopping regularly online with a chosen supermarket is not only very efficient but also means you avoid the sights and sounds of being in a shop, and, depending on some chains, you can earn loyalty points over time.
- Sell your unwanted items: Every time you buy something, make an effort to sell something – second-hand and digital thrift apps have exploded in recent years, making it even easier to declutter while turning a profit.
- Take a breath: Impulse online buying is convenient, especially with next-day delivery now the norm, but the costs stack up. Next time you’re about to make a purchase, take time before completing the transaction – from an hour to a night’s sleep – and see if you really need to make that purchase.
