Money in pockets

How We Accurately Detect When You Waste Money

in Innovation

The first question we get after telling someone that Budgetable accurately detects wasteful spending is, of course, “What do you consider ‘wasteful’?”.

We gave this a lot of thought before we even considered adding this feature to Budgetable –because we wanted to get it right. Many of you have also asked us the same thing. We’ve touched on the point, but I felt obliged to fully explain how the wasteful spending functionality in Budgetable works.

The actual algorithm that determines which of your transactions are wasteful is quite simple. This is usually a good indicator that you’re onto something. I won’t go into the math behind it, but rather, I’ll outline the concepts.

So what do you consider “wasteful” anyways?

In three words: small reoccurring purchases.

That morning gas station stop for a Coke, swinging by the grocery store for “a few things” after work –these are a couple of examples of what Budgetable considers wasteful. In other words, Budgetable doesn’t really care what you buy or where you buy it, or even if it costs a lot. It’s looking for certain patterns in your spending as a way to bring these habits to your attention.

What do we mean by “reoccurring”?

Budgetable looks for frequent purchases from the same merchant categories (i.e., fast food, entertainment, etc). Reoccurring purchases aren’t merchant specific, that is, you can’t trick Budgetable by alternating between McDonald’s and Burger King.

My examples may leave you with the impression that Budgetable considers fast food as wasteful. Some people might say that, but for Budgetable to work as a technology, we can’t make any generalizations like that.

Budgetable looks for frequent purchases within the same merchant categories –regardless of the category.

What does Budgetable consider a small purchase?

Budgetable doesn’t have a statically defined amount as it’s threshold. In other words, a “small” purchase is simply a purchase that is significantly less than most of your other purchases from that merchant category.

Let’s say for instance you stop at the gas station by your house every morning to get a Coke and some snacks, but you also get gas at the same place. Well more than likely that gas isn’t going to be wasteful. Again, not because of what the purchase is, but because it’s not a frequent purchase relative to your other purchases. The morning stop for snacks, however, would be probably be marked as wasteful because the frequency of these purchases is significantly higher than your normal purchases.

A weekly gas transaction, let’s say of $50, might total more than your daily $5 snack purchases combined, but nonetheless it’s the small reoccurring transactions that will get flagged as wasteful.

I hope this clears up some of the controversy that’s been floating around about how Budgetable knows which transactions are wasteful and which aren’t.

As always, we love to hear your comments. We read them all and respond to most.

Ryan Bales

About Ryan Bales


Ryan is the Founder and CEO of Bync, which he founded in 2012.

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{ 4 comments… read them below or add one }

David June 14, 2012 at 8:53 pm

I don’t think you’re convinced if what you’re trying to sell us. Bottom line it is a stupid way to determine wasteful.spending.

Reply

Ryan Bales June 14, 2012 at 9:08 pm

It’s one of Budgetable’s most popular features. In other words, it has sold itself. If it was “stupid”, it wouldn’t work, and it wouldn’t be popular –but it does, and it is.

Reply

Brett @ Money Madness Blog June 14, 2012 at 9:36 pm

@David – I like how you offer no explanation. I’ve personally been using Budgetable for about a week and I can say first hand that it does really good at determining wasteful transactions. Ive only had to correct a couple so far, and if i’m not mistaken, the system learns. I think you should try Budgetable before making an assumption…. my two cents.

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Ryan Bales June 14, 2012 at 11:40 pm

Shoot me an email and tell me about the transactions you had to correct… By our estimates we’re close to about 90% accuracy rate with most users and your input could really be helpful.

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