Could an encouraging "smiley face" help our money management?

A six-month research programme carried out among housing association tenants has established that receiving regular, encouraging “smiley face” feedback on their energy use has helped people to cut their fuel bills by some £80 a year.  

Could this simplest of encouragement methods be adopted by banks to help people keep on top of their budgets?

The National Energy Study by consultants Sustainable Homes UK, launched at the Chartered Institute of Housing’s annual conference, was carried out with 14 housing associations and more than 500 households. 

Different kinds of feedback were tried, including emailed advice and regular usage readings, but none were as successful as the simple “smiley face” emoticons which were sent out when usage was low relative to the rest of the group, and “sad faces” sent when it was high.

All participants had received energy-saving tips before taking part in the research.  The research also found that while different types of feedback had different levels of effectiveness, any feedback was better than none.   

It also showed that while a huge variation existed in people's level of energy use, without any obvious explanation, the effect of giving feedback – and in particular, of the simple, smiley face of approval – was positive across the board.

So if we just need the simplest of encouraging nudges to lower our energy consumption, couldn’t the same principle apply to managing our budgets?

While this isn’t going to have a significant effect on some of the high levels of unmanageable debt we hear about every day at Debt Advice Foundation, it may well help a lot of us who struggle to keep a firm handle on our regular spending.

If your bank let you know that your debit or credit card spending with a particular regular outlet was up, would that jog you to keep a closer eye on that area of spending? 

In fact, if your bank broke your monthly statement down into priority spending and the rest, and then alerted you when your balance was getting low, would that be helpful?

Every commercial organisation asks regularly for feedback these days, including the banks. Is it time they started giving us the kind of regular feedback that would help us keep out of debt?

For more on the National Energy Study, click here