Keeping spending in check with a Dynamic Per Diem

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In our early research, we found that overspending was the most common and most complained about issue that Millennials faced. It’s not hard to understand why—it’s ridiculously easy to spend money in our post-cash world with auto-debits and contactless payments. Before we know it, we’ve spent more than we can afford, and our goals and even our bills remain un-funded.

One of the respondents to our early surveys made a comment that stuck with us. When asked to recall a time when they felt they had spending under control, a frequent business traveller said ”It was so easy not to overspend when I had a per diem.” Determined to not spend any of their own money, they stuck to the $75/day allowance their company offered them for a week. It makes sense—a per diem is a simple number a user can refer to when going about their day. We asked ourselves, “If we present a user’s spending money into a per diem, will they rein in their spending?”

I had already been isolating my spending money in my checking account from my bill money and goal money. They were transferred out of my checking account immediately every payday, leaving only my spending money. To test this idea, I created a spreadsheet on my phone that divided my checking balance by the number of days until payday. Every day I would enter my balance, and it would calculate a daily average or “Per Diem”. While I never spent exactly my Per Diem (or even close), there was a natural feedback look which allowed me to pace my spending. If my Per Diem went down one day, I knew to cool it until it went back up again. I loved this and wanted to incorporate this in the app.

The implementation of the per diem was dynamic in that it re-calculated the per diem with every balance update. If, say, a user had $1,000 of spending money at 8am, and 10 days until payday, they’d have a $100 per diem. But if by lunchtime they had spent the whole $100, their per diem now showed $90 per day.

Early testing was promising. The Spending screen displays the same portion of money for every day until payday. Users who regularly viewed this screen overspent 23% less than those who only referred to the total spending number on the home screen. Some amount of this decrease in overspending could be attributed to the visual approach we took, presenting money as a large or small stack depending on the amount rather than just a number.

Today, with small improvements in visual design and UX, that number has climbed to 29%. One user said, “[the per diem] is kinda like when you’re crossing the street and the stoplight shows the number of seconds you have to cross. Often, you subconsciously modulate your pace to the time remaining so you reach the other side with 0 seconds to spare. That’s what it’s like.”

Matthew Sallin