Managing your finances can be tough, especially if no one has ever taken the time to sit down with you and explain how it all works. SmartPath, a Y-Combinator backed company, aims to help low-income people, and the 75% of Americans who live paycheck to paycheck, better manage their finances by enabling them to make sure they spend less than they make.
“You haven’t taught people how to play Monopoly, and then wonder why they’re getting crushed in the game,” SmartPath CEO Alok Deshpande told me.
SmartPath’s mobile app is designed for people to use in conjunction with either in-person or web-based seminars offered through their employers. SmartPath works with companies like Delta Airlines, Emory University and Verizon Wireless (which owns TechCrunch via AOL).
In order to help employees stop living paycheck to paycheck and put some money into savings, SmartPath’s budget app makes it easy to track income and expenses, as well as compete with co-workers around engagement. Co-workers won’t ever see how much money is in your account, or how much money you make — they’ll just see how engaged you are with the app. The app also features text and video to teach the fundamentals of money and how to save it.
“It’s unbelievable what happens when you demystify this stuff,” Deshpande told me. “When you use words like asset allocation, you lose people. In app, there are videos to demystify this stuff. Teach it to them in short chunks and make it relatable.”
Those who engage the most with the app in theory should be more engaged with their finances, which is the first step of financial success — simply knowing what you’re working with. Employers can then reward employees with prizes like the ability to select your shifts for the next week, get VIP parking access or get an extra $100 in next paycheck.
SmartPath charges employers between $1,500 to $2,500 a day for a seminar. For access to the app, SmartPath charges anywhere from $1 to $5-to-$6 per employee per month. Ultimately, the agreed upon price depends on the size of the company. For employers, they benefit from higher retention rates, a decrease in absenteeism, higher participation in retirement programs and better morale.
In the near term, SmartPath plans to keep its service as simple as possible. Down the long road, SmartPath will integrate assessments to give people a better idea of where they’re at around their savings, as well as debt calculators.