Financial Wearables Continued: Financial Health Lessons from FitBit and OthersAlissa Saoutina |
People realize they need help to be financially healthy. Example: Accenture reports 68 percent of US respondents say they would welcome a safe-to-spend analysis from their bank. Third parties and select banks are creating ways to help consumers to achieve financial health. A healthy consumer leads to a healthy bank; a healthy bank leads to a healthy economy.
But what does exactly does it mean to be financially healthy?
In a traditional sense, health is a state of being when nothing is preventing you from living your life. Being unhealthy is an unpleasant distraction from doing everyday things: eating, working, playing. Once you are unhealthy, your entire concentration shifts to getting yourself back to the normal healthy state where you can do things, rather than being in a state of disrepair.
This concept can also be applied to people’s finances. If you cannot pay for things that you need—you are unhealthy, and you may be even infectious. In today’s follow up to our first post on Financial Wearables, I am going to explore how FitBit, Jawbone Up and others can teach us about financial health.
Lesson 1: Starting small and building up
When you strap or clip on a wearable like FitBit Zip, you embark on a continuous journey. Achieving well-being is not a onetime goal, it’s a lifestyle change. Smart devices help you keep track of how you are performing healthwise and the goal-setting feature can help speed up the process. But the main idea is to start with observing what you are doing today and how you can improve tomorrow—step by step (no pun intended).
In personal finance, savings rate and total volume are the measures of our financial health. Although most people acknowledge the desire to save, many find it difficult to actually go through with it. Wearables encourage and endorse good physical behavior that build into good habits. Similarly people need tools that help them to control their spending and actively save money over time.
Lesson 2: Taking guess work and fads out of health
Health is about balance. But most people have a hard time knowing what that balance looks like. One bottle of soda actually contains about 17 teaspoons of sugar—which even on a really bad day you wouldn’t eat straight up (sugar—neat!). With smart clothes and dishes it will be harder to ignore the fact that you may be consuming too much of a good thing. Even healthy drinks like smoothies and fruit juices are packed with tons of sugar.
With finances it is important to know what are your bad habits are break them in a way that will makes sense for you. Let’s say you decide to save aggressively. That means you have to make sure you spend less elsewhere. Can you even do that? If a particular saving’s rate proves too much, you may become discouraged from saving even a little over a longer period of time. Understanding how to set reasonable goals that can grow with your ability to defer gratification is key to building enduring good habits for both physical and financial health.
Lesson 3: Enjoying the experience
People that actually enjoy exercises are far more likely to lose weight than people who do not. The ability to set goals, and earn badges adds to the fun of interaction. People place a lot of value on the design of their wearable applications—the charts and animations. Saving money for a holiday, a high-tech speaker, or a motorcycle is definitely more fun than “10 percent of your paycheck in the bank”. The goals feature is what attracted me the most in the Saved Plus app, seeing the bar inch closer and closer to my dream car makes savings so much more exciting.
This is the second post in a series examining the intersection of wearables and financial services. Check back for last post in the series; why banks should care about wearable technology.