Innovative Social Media Applications for Personal Finance
August 20th, 2010
Becoming more finance-savvy and making smarter decisions on how to manage your money has gotten easier and more interesting today. A growing number of personal finance-related ventures are starting to take true advantage of the power of social media by connecting people beyond the boundaries of Facebook and Twitter. Peer-to-peer (P2P) collaboration and consumers evolving into co-creators are now part of a new reality in the personal finance field.
It’s not uncommon to see people nowadays relying more on web services to manage their budgets online using web tools such as Mint, creating a financial plan with Gosimplify, estimating the value of their homes with Zillow, or simply finding and sharing useful money management tips through personal finance blogs and online communities. Here is a personal selection of the most innovative websites I’ve found online that are leveraging the power of social media and reinventing personal finance as we know it. Get ready to evolve and innovate:
Need money for a kitchen remodel? Social Lending might be your best option!
Peer-to-Peer (P2P) lending sites like Lending Club and Prosper are online communities of people borrowing and lending money among themselves, without the intermediation of a bank. They basically connect borrowers and lenders trough an online auction in which the lender that offers the lowest interest rate “wins” the borrower’s loan. By eliminating the middleman, borrowers usually receive lower interest rates than the ones they would get in a traditional bank. Consequently, lenders can also expect to receive higher returns (Lending Club’s average return is 9.65%!).
My dad’s portfolio is doing better than your dad’s
Online investor communities like Investorvillage, Covestor and SocialPicks allow people to compare their investments portfolio’s performance to those of peers, professional analysts and financial bloggers. As SocialPick’s website claims, it is “Social Networking for Serious Investors”. Other communities, like Tip’d, offer investor advice and “crowdsourced” financial news. The idea of letting audiences generate finance-related content seems to be growing at a very fast pace.
Want a new bike? Your Facebook friends can help!
Even though it offers one of the highest savings interest rates (2.15% APY at the time of this writing), Smarty Pig is not your ordinary online bank. Behind the cute and friendly interface there is a very innovative business model that uses viral networking to its advantage.
It works like this: users create a free Smarty Pig account and set specific saving goals (e.g. $700 for a bike by January 15; $3,000 vacation fund by August 30). Smarty Pig then calculates how much users should contribute each period to reach your goal. The interesting part is that it then allows users to openly share their saving goals in social networks like Facebook or Twitter with family members and friends, who can make contributions towards their savings goals.
Let’s coupon together!
There are many websites that offer coupons and deals for online shoppers, as well as many online “coupon exchange groups” that serve as platforms for individuals to exchange unwanted coupons with fellow group members. But a website named Groupon goes way beyond coupon exchange.
Groupon emails it subscribers a daily deal in the city they select. The deal might look something like this: “1 hr. massage at Green Body Spa for $50 in Fort Lauderdale ($100 value)”. If enough people sign up for the offer that day, everyone gets the deal. By pooling a large group of consumers – and their buying power – Groupon is able to negotiate huge discounts with retailers.
Groupon depends on a lot of people signing up for their deals, so it makes sense that they are paying users $10 when a referred friend signs up and get their first Groupon deal.
Not interested in the $50 Barnes & Noble gift card from Auntie Patty for your birthday? Trade it!
Gift cards have become increasingly popular in the last years. Among their many advantages, they relieve us of the burden of having to select the right gift. But as you might know, some gift cards are never redeemed (between 6% and 10%, as most experts estimate), amounting to huge gains… for retailers.
Thanks to the social trend on the web, sites like Plastic Jungle are able to pool consumers and allow them to exchange gift cards online or even turn unwanted ones into cash. Gift cards buyers can save up to 30% over retail prices and gift card sellers can get up to 92% of the unused card value. Not bad at all, don’t you think?
Social media is just beginning to transform personal finance as we know it and there are many innovations still to come. Organizations that are able to keep the pace and update their business models with the right social media strategies and tools will definitely keep reaping the benefits and leading the way. But remember, regular folks can also benefit from more and more openness and transparency, better deals and better returns. Just start learning the new game today and don’t be left behind.
Do you know of other innovative ways social media is being currently applied to personal finance? Let us know and share them here!
Valentina is a Project Manager at SOWEB Inc. and the new blogger on board with interesting insights on how social media is affecting our daily lives.
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