Earmark: a budgeting app you might actually use

By Erin Griffith , written on August 23, 2013

From The News Desk

It's not difficult to find a good budgeting app. It is tough to find one you'll actually like to use.

Earmark, which went live in the App Store six weeks ago, is less about balancing your spending with your income and more about the psychology of spending. The app rewards you for withholding. It's kinda brilliant.

It works as such: On Earmark, you save a "wish list" of five items you want to save up for. It can be anything from an iPad to a trip to Paris. Every time you decide not to splurge on a fancy lunch, or on another beer, or on a frappuccino, you add that unspent money to your Earmark total. Social features hold you accountable -- your friends can see what you're saving for, how much progress you've made, and offer encouragement. Game mechanics like milestones and streaks attempt to fill the void of dopamine you experience whenever you decide not to buy something.

Earmark is purposely not hooked up to your bank account. There's a reason for that. "People say the app is fun and very light hearted," says CEO Josh Chambers. "It doesn't feel like budgeting on Mint or HelloWallet. The minute you introduce bank statements, we lose some of that." He says behavioral economic research shows that people have a way of mentally keeping track of their money with high accuracy.

"If you're using Earmark, it's because you have a psychological or philosophical reason to do it. You have already bought into the experience," Chambers says. "If you're using it to lie to yourself… there's no reason why you would do that." Even so, sticklers who really want to see the money move from their bank account to their Earmark piggy bank each time they forgo something can use Earmark's integration with Dwolla. The company is open to changing its stance on bank accounts if it makes sense to dedicate resources to it in the future, Chambers says.

So that's all good and well. The clever part, though, is Earmark's plan to monetize. If the app can gather a large, dedicated user base, it will have struck advertising gold. People tell Earmark exactly what they want to buy and they're even saving up money for it. Why not show them an Expedia offer when they're fantasizing about that trip to Iceland?

Purchase intent is why Google's paid search ads remain the most effective (and expensive) form of advertising on the Web. Earmark already has $500,000 worth of purchase intent on its platform with just a few hundred registered users. If the app takes off, advertisers will love it.

Chambers would know -- he's spent his career in advertising, most recently leading the Reebok-Crossfit rebranding as a planning director at Tribal DDB. Earmark is his first entrepreneurial endeavor, but he's realizing the advertising world taught him more about startups than he realized.

"Growth hacking? I'm pretty sure that's marketing," he says. Since starting Earmark, he's been on the receiving end of plenty of unsolicited advice from startup people. Young founders have told him to stop doing freelance work, which he does on the side to support his two kids. Others have told him to study up on a new concept called customer development. "That's been in the advertising world for years," he says.

"I found myself thinking, like, 'dear God, do I actually like the advertising industry better than the startup industry?'"

He's joking, of course. But that ad world background will come in handy at Earmark. Most young founders with no advertising experience struggle to bridge both worlds. They believe that if they just build up a big enough audience, advertisers will be begging to give them money. Then they're shocked to realize even Facebook has to beg and grovel for every dollar it wins from advertisers.

After bouncing around between New York, DC and Minneapolis over the last year, Chambers will soon return to New York to start discussing Earmark ads with his ad agency contacts. Right now he faces the dilemma any early stage app maker faces: He's got a small number of engaged users who love the product (something Brian Chesky of Airbnb argues is more important than a large number of users who are lukewarm on the product.)

But in order to raise venture money and take the company to the next level, he needs vanity numbers that impress investors. One seed group told him they won't look at anything with less than 250,000 users. Chambers joked that by the time Earmark has that many users, it won't need outside investment.