ImpulseSave Opens Up App for Instant Gratification Savings

6/19/12Follow @xconomy

Cambridge, MA-based ImpulseSave is taking its on-the-fly saving application to the masses. The startup announced today that it’s graduated from a four-month beta period and is launching its application on the iTunes App Store.

Co-founder and CEO Phil Fremont-Smith touts his technology as one that actually works with humans’ hard-wired drive to act impulsively, rather than rewarding the difficult task of planning ahead.

“For 100 years now, players in the personal finance space all have been coming at this problem of the failure of personal finance in America from one particular set of assumptions that’s founded on the idea of a behavioral change,” Fremont-Smith says. “In order to do well with money, personal finance, we have to learn to use budgets, spreadsheets, put ourselves on a financial diet and stick to that diet to be a better person.”

“We’ve actually changed the transaction of savings to fit people,” he continues. “In a world that is so elegantly and creatively optimized to spend money at every turn, we’ve made it as easy, as frictionless, as fun, and as instantly gratifying to save it as it is to spend it.”

Users set up saving goals on ImpulseSave, like $500 towards a new iPad or $1000 for a family vacation. When they’re faced with a situation where they’d normally impulsively spend, they instead post the item to ImpulseSave (and can use mobile texts, Instagram pictures, or Foursquare check-ins to do so). ImpulseSave links their checking account to a separate savings account set up through partner Leader Bank, and immediately transfers the money that would have been spent on the impulse item into the savings account to be put towards a goal. It also sends “lighthearted” reminders along the way to encourage users to toss extra cash toward the goal, much the same way marketers promote offers to consumers on the fly as a minds to get them to spend, Fremont-Smith says.

The focus is to eliminate the many small, unplanned purchases that crowd shoppers’ carts during planned errands, Fremont-Smith says. “It’s usually not some big dramatic mistake they’ve made that wipes people out financially—it’s death by a thousand cuts,” he says.

“Even when they reach a goal, the majority of users do not withdraw it. For most of them, it’s the first time they experienced the fun of having some money pile up, so they’re reluctant to spend it. They put a certain mount of money toward better use” like paying down debt, he says.

For now, ImpulseSave is working on expanding its user base, plugging into e-commerce sites, and developing geo location features that can better spur savings. Like the ability to recognize when customers have walked into a store they’ve established as a place where they’re in danger of frivolously spending. Friends on the platform can shoot them encouragements on the fly to save instead of spend, and brands can promote offers to match the funds that consumers save. Partnerships like this—with both personal investment and retail businesses—are a revenue stream for ImpulseSave. The three-person startup also commands a fee for each new savings account opened through its platform.

ImpulseSave still sees financial planning—central to other personal finance technologies like Mint.com—as having a place up in its system. It just doesn’t want consumers to worry about it up front.

“There is a place for making a plan,” Fremont-Smith says. “That comes later.”

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