What Lucie can and can't fix

Almost everyone has a money task they’ve been meaning to get to for months. The streaming subscriptions that have never been reviewed, say: a ten-minute job, known about, not done. And a great many people have set up a budget, often more than once, and stopped using it within a few months.

The obvious question is whether Lucie will fix things like this. Some of them, yes; that’s the point of building it. But not all of them, and we’d rather set out which is which now than have it emerge after use.

Managing money can be tricky - but not for just one reason

Those two examples look like the same pattern. They aren’t. The behavioural research has studied at least six distinct ways in which day-to-day money management can go off the rails, and those are just two of them.

First, the subscriptions. They’re a task. A small, discrete task, and a boring one. You know exactly what to do; it would take ten minutes; it hasn’t been done. There’s a word for that: procrastination. The behavioural research has a precise explanation for it. People are present-biased: doing a task today always costs more, psychologically, than doing it tomorrow would. And people consistently misjudge their own future behaviour: they believe they’ll do it tomorrow, and tomorrow they believe it again.¹ Combine the two and a small task can be put off indefinitely.

Second, the budget. It’s different. Setting it up is the easy part; almost a bit of fun. What kills it is all the stuff that comes after: the monitoring, the updating, the need to check on categories, etc. Week after week. Forever. Keeping a budget alive takes sustained attention, and attention reliably decides it has better things to focus on. The research on self-tracking of every kind (diets, fitness, money) finds the same curve: people start, and within months most have stopped, because the ‘keeping-it-up’ is a cost they decide not to pay.²

Third, there’s the purchase made in the moment; the thing in the cart (or at the bar) at 11pm. Nobody consults a budget at that point; the decision takes seconds, probably feels great, and gets analysed later. Or never. The research calls these hot-state decisions.³

Fourth, there’s the spending nobody ‘decides’ at all. The coffee on the way to work, or the same takeaway on the same night (Tuesday tacos). That isn’t a decision; it’s just what you do. It hasn’t been considered in maybe years, if ever. The research term is automaticity: behaviour triggered by context (the place, the time, the routine) rather than chosen, which is a different thing again from the hot-state purchase, where at least a decision is happening.⁴

Fifth is the practice of not looking at all. You don’t look at your bank account when money’s tight. Or that month’s credit card statement is left unread because it’s going to be bad news. Researchers call it the ostrich effect, and it’s measurable: people check their finances more when they expect good news and less when they expect bad.⁵ It isn’t procrastination; procrastination is putting off a chore you know about. This is not wanting to know.

And the sixth isn’t a behaviour at all. It’s the unplanned $1,400 car repair. The fortnight where the rego, the insurance and the school costs all arrive at once. When we surveyed young Australians before starting to build Lucie, this was the biggest hurdle they named: not income (which was a surprise). Researchers who tracked low- and moderate-income American households for a full year found them averaging five or six months a year in which income ran at least a quarter above or below its normal level.⁶ You can be doing everything right and still get knocked over by variability.

Six different things. From the outside, they all just look like varying degrees of not managing money as well as you might want.

There’s also a seventh thing, deliberately not on this list, because it isn’t a ‘management’ problem at all; it’s more important than that. Simply not having enough money. Most people feel that way some, if not most, of the time. And for a lot of people it isn’t just a feeling; it’s a basic fact of financial life, and it’s serious. We’ll come back to it, because it sits underneath everything else here.

Different problems respond to different fixes

Take the postponed task. A nudge at the right moment can shift it. There’s a well-known illustration: when a bank replaces someone’s card (lost or stolen) and the cardholder has to log in and record the new card details, subscription cancellations jump.⁷ It was never that people wanted all the subscriptions; no moment ever forced the choice. Now, nobody is proposing that the answer is to cancel everyone’s cards, but a nudge at the right time has a measurable effect.

The budget problem needs something else entirely. For most people that ‘something else’ is something to take the work off them.

And the 11pm purchase? It’s the hardest to reach: interventions around those sorts of things work best inside the moment itself, or else they have to have been set up in advance, in a calm moment, as limits you choose for yourself.⁸

As for habits, they barely respond to information at all. What shifts them is a change in the cue: which is why habits tend to break mostly when life changes (a move, a new job) and barely otherwise.⁴ And they only shift if the person wants them to change at all (a point we’ll come back to).

For avoidance, the research is clear that the pattern exists, and much less clear about what fixes it.

And volatility often can’t be ‘fixed’ at all of course. Sometimes the best you can do is see it coming where possible, try to weather the storm and get through it.

So what will Lucie actually do about each of these?

The honest answer is a different amount for each of the six.

The ‘postponed task’ is mostly a timing-and-friction problem, so Lucie is being designed to catch the right moment for you: to watch what’s going out, spot the subscription that’s crept up or sits unused and raise it with you at a point where you can actually deal with it.

The ‘budget problem’ is an attention problem, so the design intent is that Lucie takes over the ‘attending’. Tracking, categorising, watching that things are going well, noticing when they aren’t: the idea is to make that Lucie’s job, not yours. The intent is that you get the information you need when you need it - and asked what you want to do about it. The whole premise, set out in The architecture of money decisions, is that attention is the scarce thing in money management, and Lucie is being built to absorb the load rather than add to it.

The 11pm purchase is a different story. Being there at the moment of decision is exactly where Lucie is heading: helping you make the decision well while it’s still being made, and in time, if you want it, acting within limits you’ve agreed. That’s the idea we call permissioned agency, and it’s core to the longer vision. But it’s the direction, not the first release. At launch, Lucie won’t be in the purchase flow, and we’d rather say that plainly.

Habits, Lucie can only ever half-fix. Lucie is being designed to show you spending patterns honestly: what the daily coffee actually adds up to, whether it’s growing, what changed since last year, that sort of thing. But whether the habit is worth keeping is your call, not Lucie’s. And this is the point we said we’d come back to: if the daily coffee is something you love, it is none of Lucie’s business to disapprove of it. Lucie is being built to serve your goals for your life and your money, whatever they are.

And then there’s the not-looking problem, where we need to be especially honest. In theory, an agent that watches your money so you don’t have to is built for exactly this. If the barrier is that ‘checking feels bad’, something that checks for you and only speaks up when it matters addresses that barrier directly. We believe that. But the research on what actually helps people who avoid their finances is thin, so this is an hypothesis, not a finding we can point to. We’ll find out in time.

The volatility problem is different again. Nobody can predict the car breaking down. But a decent share of what feels like surprise was never really a surprise: the insurance renewal comes every year, and the quarterly bill comes every quarter. Lucie is being designed to see the foreseeable ones coming in your own transaction history and raise them while there’s still time to do something, and to help you see genuine trouble sooner when it does arrive. What that can do is reduce the number of foreseeable costs that arrive as surprises.

There’s one more thing to address, and that’s debt. A lot of what’s described above gets considerably harder when it happens on borrowed money. An impulse purchase on a debit card is done when it’s done; the same purchase on a credit card or a buy-now-pay-later keeps costing until it’s paid off. And plenty of people are juggling several of these at once, along with a loan or a mortgage, with interest and fees running on all of them the whole time.

At launch, the help Lucie is being built to give here is in managing it: bringing everything you owe into one view, whoever you owe it to, and helping you plan around it. Over time, we want that help to extend across the whole of a person’s money life; and for a lot of people, debt is right at the centre of it.

Which brings us back to the seventh thing; the one no tool can fix. If the problem is simply that there isn’t enough money, better watching and better timing and even better management help only at the margins. Of course those margins do matter more, not less, when money is tight: avoidable fees, unwanted subscriptions and bad timing all cost proportionally more. But no tool like Lucie will fix fundamental income stress. Some fintech marketing implies otherwise; we think saying it plainly is more useful.

The honest scope

So will Lucie fix your money management? It depends on what’s wrong with it, and we’d rather you knew that from us.