You talkin’ to me? Money-coaching apps are using tough love to help spenders

Americans are bad at saving — and banking apps are trying to talk them into doing better.

Almost 60% of Americans have less than $1,000 in savings and nearly 80% live paycheck to paycheck. A number of artificial intelligence-powered chatbots are trying to talk people into improving, offering help like budget coaching, unsubscribing users from unnecessary recurring costs, and telling them whether they can afford that take-out order on Friday night. But when your bank talks to you, how does it sound? That depends on the app, and who you are, said Bethy Hardeman, a personal finance expert at Tally, a smart debt management app.

“The psychology of saving is very interesting and that’s exactly what these chatbots are trying to tap into,” she said. “It varies a lot by person, what is going to help you build a habit or take action.”

Chatbots are having frank conversations with users about their money
Apps like Charlie and Trim use artificial-intelligence-powered chatbots to allow users to have frank conversations with a virtual assistant about finances. A user can ask Trim, for example, “what are my subscriptions?” and allow the app to cancel subscriptions they no longer want. Another app, called Plum, allows users to ask questions like “Hey Plum, what bills do I have coming up?” so they can prepare to pay them. AI financial assistant Olivia offers similar services, prompting users with a cheerful series of emojis, and saying “Hi there! I’m Olivia, your very own financial assistant.”

These apps are not always so cheery, however. London-based AI-powered finance coach Cleo recently took a more biting turn with its language, releasing “a more savage version” of the app that gives users “tough love” when they say they need it, telling them, for example, “here are the companies bleeding you dry” and “can you afford to be a real adult now? No.” The free app recently celebrated more than 300,000 users in the U.K. (Cleo, Charlie, Trim, and Plum did not respond to requests for comment.)

One app has the demeanor of ‘a golden retriever that is really good with numbers’

Hardeman said tougher approaches are having a moment. “The concept of roasting or shaming users is new and bold and out there — it’s being experimented with,” she said. “But I think ultimately people respond much better to positive feedback and encouragement, especially when it comes to your finances.”

The best way to get people to actually save is to give them concrete steps and plans of action, Hardeman said. Visualizing positive actions that can be taken with saved money is also helpful, a 2017 survey from Capital One found. It showed 67% of people who incorporated “nostalgic items” into financial planning increased the amount they saved, compared with just 22% of people who took a boring finance seminar. This means people who considered a family heirloom while planning a vacation were able to better envision the importance of family time, the study said — in other words, people need to engage the emotional part of their brains to attach meaning to saving and become more motivated.

The free AI chatbot Charlie takes a friendly approach to “alleviate user anxiety,” said co-founder and chief executive officer Ilian Georgiev, who described the demeanor of the robot as “a golden retriever that is really good with numbers.”

“There is nothing you can do that is going to upset him,” he said. “He admires you and wants you to do better.”

When negative reinforcement can work

Although some experts say a kind approach and hand-holding is the best way to get people to save, others say negative reinforcement has its place. The best way to get people in their 20s to save, for example, is to use peer pressure, said Bradley Klontz, a financial psychologist.

“One way to help people in that bracket save is to say, ‘the top 25% of people your age and income profile have saved x amount and you haven’t — what’s wrong with you?” he said. “The basic message is: your peers are doing this, you stink at doing this, do better.”

The biggest key to getting someone to save is to automate savings, Klontz said. This is somewhere chatbots shine. But low-tech ways to save still abide, said Mark Hamrick, senior economic analyst for This includes making and sticking to a budget, paying down debt, and living within one’s means.

“Ultimately, all the technology in the world isn’t going to compel someone to exert financial discipline to save unless they are fully invested,” he said.

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