Money is the second largest source of stress in the US. With the dollar going down, and the price of gas going up, Americans are being more self-conscious of where every bit of their pennies go. Unfortunately, everyone is not a gifted accountant, and some of us can’t afford a gifted accountant. For your personal finances, there is another way to coach your dollar in times of inflation.
Wesabe is an innovative new way to manage your money and make good financial decisions. Personal finance managing softwares are already a proven success. Marc Hedlund, co-Founder and CEO of Wesabe, has designed and unique approach for Wesabe to operate in the personal financing space.
First, to know your daily spending habits, Wesabe has designed an agent that downloads your bank statement on your machine, clears all sensitive data out of the document, and sends the now-virgin statement to your Wesabe account. Furthermore, Wesabe’s hosted servers have been designed to make your personal information and your spending habits two independent bits of information that can be associated only through the entry of your login password. Marc explains this information infrastructure was chosen to protect consumers from any government’s decision to access Wesabe’s database.
Once you’re signed up, you’ll notice that you categorize your expenses with tags. Wesabe adopted a tag paradigm because for every dollar you spend, there might be multiple reasons why you spent it: if you buy a loaf of bread, it is a grocery-related expenses. However, you might have bought the bread to make sandwiches for a birthday party for your brother. Therefore, the keywords ‘party’ and ‘family’ should also be associated to the expense to get a full picture of where your money goes. The tagging approach makes Wesabe unique in the personal finance management space.
Wesabe also offers a unique experience through its vibrant community. Even if you didn’t upload your bank statements to Wesabe, you can come to the site and interact with other members. Say someone considers using its 401k plan to pay off its student loan but is not sure this is the best move: Wesabe is the perfect place to find answers to such tricky questions. If you’ve uploaded your bank statements to Wesabe, through the tagging system, Wesabe will compare your spending behavior with similar members and recommend tips and tricks to save money that seem to work for the other members. Let’s say you’ve just spend $1200 at the mechanic down the street, Wesabe will be able to look into where other members went for a cheaper mechanic work, and it will recommend this place to you if it is located in your living area.
Two weeks ago, Wesabe released a tool that allows its members to update their expenses through Twitter. When you’re standing in line for a latte, there’s two ways you can go about it: Send a direct message to Wesabe with the item purchased, the amount paid, tags and even a side-note; or send a public message @wesabe and share your purchase experience with your followers. That’s extremely convenient to keep your books up-to-date, and as I told Marc, if there were a Twitter 101 class, Wesabe would be a case study.
Wesabe is entirely free, so where is the startup planning on making money? Marc Hedlund explained to me the philosophy that drives the company. Banking institutions have an enormous amount of data about the way we spend money. They do not wish to use that information to help their customers perform better financially because, let’s face it, they make money out of our financial failures. Wesabe wishes to take those numbers from the banks and give it back to the community.
Marc describes Wesabe as a ‘follow the money’ kind of business: It sees where people spend money, defines the smartest spending habits, and recommends them to members in need of financial control. At the end of the interview, since Wesabe recommends places to spend your dollars, we started to argue whether Wesabe was a complement to Yelp, or simply a pure competitor. I made the video a little longer to include the part where he talks about the kind of raw objective data that Wesabe gathers, and how this data requires more subjective, individually-expressed opinions to make Wesabe useful instead of completely dull.