Personal Finance

Should you be Squirrelling away your money?

By Oliver Smith 15 February 2016

Mutaz Qubbaj is on a mission to help people manage their money better, and the NHS, O2 and London City Airport are all offering his service to their staff.

How good are you at managing your money?

Britain’s £2 billion payday loan industry, and the 8m of these loans taken out every year, would indicate that the answer for many Brits is probably… not great.

In 2013 Mutaz Qubbaj was among the wave of investment bankers leaving the City to start a new life as an entrepreneur, and for him the question of what to do was obvious.

“I was talking to people and they all told me the same thing ‘between my commitments, my saving and my spending, I don’t know where my money is going’,” Qubbaj told The Memo.

And the stress, loss of sleep and anxiety caused by financial hardship doesn’t just affect staff, businesses feel this with a 4% impact on their bottom line due to lost productivity.

This was the problem Qubbaj decided to solve, and today employers like O2, London City Airport and the NHS are all adopting his solution and offering it for their staff to use.

Finding financial wellbeing

The real problem, according to Qubbaj, is the way in which we’re paid.

Managing that lump sum of money on payday, dividing it between commitments and savings, working out how much is left and what you can spend each week to avoid running out of money before the end of the month isn’t easy.

It’s one of the reasons that 1 in 4 Brits enter their overdraft 17 days after being paid every month.

“We want to give people a way to filter their income, a way to pre-plan your money before you even have access to it,” says Qubbaj.

It was from this idea, Squirrel was born.

Squirrelling away

It’s a surprisingly simple solution.

Through Squirrel’s website you enter your commitments (monthly spending like rent, bills, etc), savings goals (like Christmas or a summer holiday) and then Squirrel calculates what money you have left and breaks this down into a weekly spending allowance.

The magic is that your Squirrel account is like a financial triage for your money, it’s a bank account that your employer can pay your wages directly into, Squirrel will redistribute money back into your current account as and when you need it.

For most people this means your big monthly commitment money will drop straight into your bank account at the beginning of the month, savings will never touch your current account (so you aren’t tempted to dip into them) and every Monday your weekly spending allowance will be paid into your account.

“You’re receiving your spending money in a way that makes sense to you, because you’re only having to budget for 7 days, rather than a whole month, and you get topped up every week,” explains Qubbaj.

“We’re redefining people’s relationship with money for the better.”

Nuts and bolts

And so far Squirrel is working.

Over £500,000 has been passed through Squirrel over the last five months, half of all Qubbaj’s users are using Squirrel’s weekly spending option, and new employers like London City Airport and IT consultant Capgemini are adopting Squirrel for their staff to use if they want.

But what if you want to dip into your savings? Or spend more one week?

“If you want to dip into your savings we’ll ask you two questions 1) what are you using the money for, and 2) where do you want that money to come from? Your Christmas savings, your holiday?”

Qubbaj says that merely by showcasing the impact of higher spending today on future savings Squirrel is helping its users manage their money better.

And for millions of Brits, that can’t be such a bad thing.