Written by: Koray Can Oztekin
When we launched Zenbase, our first members were trying out the service simply for a rent day lifeline. These members would not always have the full rent amount in the bank until the last day of the month and end up paying late fees and overdrafts. As inflation soared we started seeing a different member profile with higher income who used Zenbase to better budget and smoothen out their cashflow throughout the month.
Before we illustrate how flexible rent payments help with budgeting for all household expenses let us share some quick stats about the Zenbase members:
- Their median income is equal to or 10% greater than the median income of their city.
- They spend between 22% to 39% on rent.
- When asked why they use Zenbase, 70% of the members choose budgeting as their primary reason.
Managing the budget between paychecks
In the current inflationary environment, core household expenses including rent, food and gas increased more than 10% and started squeezing all households regardless of their income. Households turned to debt to manage the additional financial burden and according to Equifax consumer debt increased by 9% since May 2021 and we are seeing a 10% increase in credit card balances.
More than 50% are living paycheck to paycheck from all income levels and now dealing with a greater gap between two paychecks. Here is an example:
- Bob was earning $3,000 bi-weekly and his rent was $1,800. Now his rent is $2,000 and he is still earning the same money.
- After paying his rent on the 1st of the month and covering his utilities and groceries he only has $275 instead of $540 as a buffer for other expenses which have also increased due to the inflationary environment.
- Now he has 50% less money to cover other expenses until his next paycheck.
Flexible rent payments align the timing of his payments with cash availability. After splitting his rent payment Bob keeps $1,275(365% more) to cover all other expenses until he receives his next paycheck. By splitting his rent payment he smoothens out his cashflow and better aligns his cash with the timing of his household expenses.
Handling risks due to affordability issues
Those with 30% ‘rent to income’ coverage ratio are assumed to be in core housing need or rent burdened: as a general rule, a healthy household budget should remain below that ratio. Unfortunately more households are now spending more than 30% of their income on rent and struggling with affordability. The risks due to rent affordability impact the rest of the household finances leaving very little room to manage other bills or any unexpected expense.
Residents taking a breath with flexible rent payments
Flexible rent payments creates such room in the household budget and automates budgeting which all residents can benefit from regardless of their income level. Jordyn has been a Zenbase member for the past 6 months:
“It’s super helpful being able to split payments up, especially with everything going up in cost lately! Zenbase is easy to use, friendly. It’s a quick help, would recommend to anyone!”Jordyn – Zenbase Member
Trent is one of the property managers responsible for more than 2,000 units:
“Being able to offer residents flexible, low/no-cost options that will make it easier for them to stay on top of their most critical living expense is valuable at any time; but in a era of inflation, and the consequent rising costs of living, it becomes ever more valuable.”Trent – Property Manager
Flexible rent payments is the designed to free up cash between paychecks and avoid reliance on credit card and other debt products. It gives the control of their household finances to the residents and helps them do the right thing financially.
Philipp Postrehovsky | Zenbase COO
Philipp is a marketing leader, brand builder and product visionary who has been involved in the fintech scene for over 17 years. In 2013 he co-founded RentMoola, which continues to be one of North America's leading fintech companies with the mission to eliminate the rent cheque and modernize rent collection for the enterprise. Before that, he was a marketing leader for Mogo Technologies, Wonga Canada and began his career at Electronic Arts. Most recently he was SVP, Marketing at Progressa and VP, Digital Marketing at goeasy. He founded Grind For Kids, a program that raised over $1 million for BC Children’s Hospital Foundation and is a mentor to new entrepreneurs.