Helping students to stay cash positive with the dab of an icon

In this article we look at an early stage budgeting app we’re developing which we think will help many students onto the road to financial success.

Setting the scene

Recently a few of us from the Northants Credit union and the University of Northampton got together to figure out how we can hone an attractive and useful banking product for the students at the university.

Our dual aim is quite simple; we need to create a great banking product that will..

  1. Help students onto the road to a prosperous, financially stable way of life.
  2. Attract students to become new members of the Credit Union

What did we come up with?

The result was that we developed the idea that along with a credit union bank account we could create an add-on app that would enable them to see one year ahead – the idea being that if they can see their path to a positive cash flow, then they’ll be much more motivated to enact the saving behaviour now.

A mock-up of our idea would look something like this.

Note: I’ve just given it a placeholder name, I’ve created a poll page for you to help us find a better one.

Here’s the story so far

Over the past year or so we’ve been meeting with students to ascertain how the credit union can support them in their student life and have made some major steps in the area of making available volunteer opportunities to gain valuable work experience at the town centre office.

While this is a great start, we’re now ready to take the next step forward – helping students find their way into a financially sustainable way of life.

But the question is, how will we, the Credit Union, attract students to join us?

The answer is that we need to make ourselves useful – by providing a way to help them keep hold of more of their money.

The student offering

We’d looked at cashback incentives and offers for students akin to what the big banks offer but, due to our much smaller resources, decided not to attempt to compete head to head with them on that.

So let’s consider our purpose, maybe it can be our unique strength:

To offer people membership of a cooperative of savers and borrowers who altogether form a community whose purpose is to help its members become financially stable.

So the idea forms to offer a bank account which also enables the member to monitor their money with reference as to whether the outlook is cash-positive.

For getting us started I re-tasked an old spreadsheet of mine – one which I’ve used myself for this very same purpose (shooting for a cash positive objective) while launching businesses in the past.

A simple concept made this spreadsheet so important to success in my own life..

If we can see how much we’ll have in the bank one year from now, then we’ll be motivated to control our spending right now – today.

How it works

The app is based on the tried and tested method of spreadsheet and graph. The first example below shows a business starting off with £5,000 and a full year’s estimated income and costs.

Month by month over the year, the business owner refreshes the estimate columns with the actual amounts.

Notice now that in this scenario the business runs out of money in about six months in early Februay.

What we now need is a way to control that point in time that we run out of money..

Making lemonade from the lemons

Once we see how long our money will last at the current burn rate, we can do some planning to keep that blue line from dipping beneath the zero line.

In this example lets say that I now take the following budget decisions:

  • Gain income £160pm: Ensuring a rise in Income 1 (e.g. take on an extra customer) in November.
  • Gain income £200pm: Ensuring a rise in Income 1 (e.g. take on an extra customer) in March.
  • Decrease office expense £180pm: Work from home, dispense with office.
  • And a decrease travel expense £100pm: Use online meetings instead of travel.
  • Also another decrease personal expense £50pm: Become generally more frugal.

The result is this:

Keeping it above the line

Notice that in the scenario above we’ve delayed the running out of money, but not forever.

The final step for you is to succeed in making that blue line stay above the zero line, and then of course your final challenge will be to drive that blue line upwards.

For students in particular

The blue line for a student looks rather different; there’s be tranches of student loan income coming in with a steady spending down of that through time.

It will look more like this graph.

The app’s next steps

We’re taking the app on the road to see how useful people will think it is.

Our first port of call will be at the University of Northampton Open Day 19th August 2017.

If you come along to one of the events look out for one of the people in the photo below.

Paul, Prince and Dale stand beside the cashflow graph in the budgeting app.

Pictured from left to right: Paul Connolly: University lecturer and volunteer credit union non-executive director, Prince: Masters student at the university, Dale Minards: Member services officer at the credit union.

Thanks to everyone for your support so far and I look forward to seeing you along the way!

Get in touch

Do drop us a line with any questions or suggestions at: paul.connolly@northampton.ac.uk

About the author

Paul Connolly

Paul is a tax practitioner in the UK. He holds a practising certificate from the Association of Chartered Certified Accountants.

He also lectures accountancy and tax at the University of Northampton.

Paul volunteers as a board member of the Northamptonshire Credit Union.

He is also an open data researcher, producing datasets and programming open data driven applications.