When is income not income? The stories behind the numbers

Welcome to the first article from the Real Accounts project’s Research spotlight series – longform reflections on the findings from the project, research methodology and the wider literature.

In this Real Accounts deep dive, Aston University researcher Hayley James reflects on how our bespoke transaction tracker works alongside interviews. Through our methodology, we’re learning that people’s finances are interconnected within and between households in ways that confound traditional views of how money management works.

The Real Accounts study involves households on low to moderate incomes who experience volatility in income and expenditure from month to month. The study tracks income and expenditure for participating households over time, using our bespoke app MyMoneyTracker. Our aim is to capture the real-time processes and strategies that may be missed by other research methods.

One early finding coming out of the project is just how much numbers fail to tell the full story. Just looking at values of income and expenditure may overstate what people earn and spend. Our participant, Alexa, discusses this:

“The one thing with me was, the Moneytracker app, it’s not quite getting things in the right places. Obviously it looks like my income is massive, like I’m on £3,000, I wish.”

Alexa is a woman in her mid 50s. She lives with her mother and adult son, and also spends time at her partner’s home. She is confident at dealing with money and financial systems, having worked in various careers which involved bookkeeping and accounts.

Part of the reason Alexa feels that the MyMoneyTracker app doesn’t reflect her financial situation is that she often acts as a hub for processing financial transactions for others, meaning money comes in and out of her account which is not specifically related to her income or expenses. This happens in three ways:

Paying for things on behalf of others

First, Alexa often pays for things on behalf of others. Sometimes this involves small amounts of money, like picking up some shopping for a colleague, which she does on the understanding that they will pay her back afterwards. Other times, this involves much larger amounts. She recently took responsibility for organising a holiday for various family members. The large, scheduled payments for the holiday were all coming from her account, with others paying their share into her account in advance.

“I don’t know what’s going on at the moment, I’ve got people paying in and paying out, and I’m just like, oh my god, cos like, my mum’s paid money in for the holiday, my brother’s paid money in… It looks like I’ve got a lot of money, but I’ve never got any money.”

Alexa feels there is a risk to managing payments for a group, having learnt from previous experiences:

“My organising days are over. I did it for my own 50th and people don’t have money and they will pay you this bit or that, and I ended up out of pocket at the end. People have dropped out even if you’ve booked flights… so I won’t book anything until the money is in the account.”

Facilitating transactions between friends and family

Second, Alexa often facilitates transactions between friends or family members, especially where she already has them set up as contacts in her banking app. One person will pay her the money and she will pass it on to her contact. She does this to speed up the transaction, so the others involved do not need to spend time adding the other person:

“I think one is for a concert ticket because I paid my mate £95, that’s for a concert ticket for my close friend. That was my close friend buying it off my mate, but I’ve got my mate as one of my mates [in my banking app] and she hasn’t.”

In another example, Alexa facilitated a payment to her friend, who provides accountancy services to her partner:

Alexa: Right erm, my partner paid the money in – it’s his accountant, but she’s also my friend and she’s set up on my account. So everyone uses me like a secretary! So that was money he paid in and it went out to her.

Interviewer: You are the centre of a lot of networks!

Alexa: Yeh, like a hub, yeh. I think that would be quite interesting for you, as it’s gonna be quite hard to work out, isn’t it?”

Here Alexa recognises the challenges this poses for projects that seek to unpack what people do with their money!

Supporting others with money management

Finally, Alexa supports her adult son with money management. This involves giving him financial support, in terms of both paying for things on his behalf and also giving him money to cover things like groceries. But she also helps him with making decisions and processing transactions generally:

“He even asks me, which I find so bizarre, can I buy this can I buy that for his sister’s birthday, but I go, it’s your money spend it, I think he’s just got so used to it. It’s weird, I find it weird. I just laugh at him, I go, it’s your money, you don’t need permission from me how to spend it, but you’ve got to realise, that if you’ve got something big coming up, you’ve got to make sure that it’s there…. He doesn’t even look at his accounts, he just asks me.”

Alexa likes supporting her son with money management, as it is something he seems to find stressful, but also recognises that this can be a burden for her:

“He says, ah it’s just easier. He just likes everyone else to look after everything. So he pays me and I pay Lee.… I say to him, you’ve got the money, you’ve got your card and your GooglePay… Maybe it is less stressful for him. Less stress for him, more stress for me [laughs]”

While these are just snapshots of Alexa’s experiences, these hidden dynamics may resonate with other participants in the Real Accounts project and are shaping how we investigate and analyse the transactions coming through My Money Tracker.  Our research will explore to what extent these dynamics are common amongst participants along with other intricacies of managing income volatility in everyday life, that go beyond the numbers.

If you’d like to find out more about the Real Accounts project, please visit realaccounts.org.uk or sign up to receive the latest research, news and events from the programme in your inbox.