Goal Based Savings Account – Interview with SmartyPig Co-Founder Jon Gaskell

Anyone who knows me should be aware that I’m a fan of encouraging people to save money: both for keeping a good sized stash of money untouched for emergency expenses and for a specific goals like buying a car.


This article is based on an interview with Smartypig co-founder Jon Gaskell. Originally launched in the USA and licensed in Australia by ANZ Bank, Smartypig is an online high interest savings account with a few twists …

Smartypig Background

  • It’s goal based and allows you to make savings goals public on social networking sites like Facebook, Blogger, Twitter etc so your friends and relatives can chip in some money or keep the pressure on to make sure you don’t give up on the goal
  • Once you reach your goal you can cash out the amount saved (including interest earnt) or swap it for a retail gift card with bonus value at a list of partner retailers eg: swap $1000 cash for a $1040 voucher.

Discipline & Setting Savings Goals

It was clear chatting with Smartypig’s Jon Gaskell that he hopes this product will help to change the mindset of a generation of people to accept the concept of “delayed gratification” instead of buying everything they desire instantly on credit and suffering the consequences in the future.

As I’ve said before when reviewing the Simple Savings community site, a large part of saving money is psychological – getting into the right state of mind and having the willpower to keep your savings habit without succumbing to temptation and spending all your savings after a few weeks or months.

A few people like me find it easy to save money, move their money around between the highest earning online savings accounts and set short, medium and longterm goals but most people find it very hard.

Smartypig pays a similar amount of interest to high interest savings accounts from banks like Members Equity and Raboplus but it differs in forcing people to set goals for a specific amount and purpose & allowing the goal to be shared with other people.

Smartypig Goals

I would have guessed that the most popular goal would be “Buying a car” but that’s 4th on the list with “Travel” related goals being the most popular – making up roughly 1/3rd of accounts open as at August 2009.

Apparently research shows that Smartypig’s predominantly young client base wants to “own their holiday” by paying for it with cash and enjoying the trip rather than paying by credit card/personal loan and returning home to stress and lots of debt.

Gaskell says the average goal length is 51 months and to date the majority of account holders are sticking to their goals, not canceling part way unless they suddenly need the funds for unexpected expenses eg: a medical bill.

Savings goals can be made public so as to allow family and friends access to make contributions and even then, only people invited by the account holder (or who know the account holder’s e-mail address) can obtain access to see extremely limited information [name of goal(s), how far to go to reach goal(s), money saved so far]. There are varying degrees of what information is available for account holder to display.

I asked my Finance Journo/Financial Advisor friend Scott Pape what he thought of Smartypig, he replied: “I think it’s a good product. Anything that encourages young people to save is a good idea.”

Future Improvements

Overall I’m told Smartypig Australia gets almost 4000 unique visitors/day (extrapolated that’s almost 1.5million/yr) and this is steadily growing each month.

I think Smartypig should do quite well in Australia but they need to consider changing a few of the product features to make it more appealing:

  • Interest Paid Quarterly – interest should be paid monthly because that’s the standard for all Australian bank accounts and seeing interest credited to their account monthly would encourage savers to stick to their goal.

    ANZ who run Smartypig in Australia said: “We’re looking into changing interest payment frequency to monthly. It was done quarterly because we licensed the technology from the US and that’s how they had implemented”.

  • Automatic Monthly Contribution From Linked bank Account – seems strange considering government employees and many private sector employees in Australia are paid fortnightly.

    Offering the option to match contributions to a persons pay cycle also reduces the chance of accidentally overdrawing the linked bank account.

  • Convert Savings Goal Cash to Debit Card – the Smartypig USA product allows people to convert their achieved savings goal into a debit card that can directly be used to make purchases. The Australian Smartypig product doesn’t offer that option yet (ANZ is considering it).
  • Mobile Phone Access – would make it easier for account holders to check their progress towards savings goals. I’m told this is currently in beta testing and will be launched once ready.

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