“A penny saved is a penny earned.” – Benjamin Franklin
Americans, in particular, have long been challenged when it comes to saving money. And, psychologists and economists are still striving to pinpoint concrete root causes for why this is the case. Some blame the housing bubble, others the ill-framed 401(k) clause and then there are those who think it’s ‘frugal fatigue’—so long as there are different pundits there will be differing opinions.
But, fear not as help is here…and, we’re not talking about swear jars or piggy banks. For those who struggle to save money the ‘normal’ way, new applications like Digit, Dyme, Acorns and Qapital have arrived to assist.
The timing couldn’t be better. Just consider the numbers: 60% of the Americans who are in their twenties save 5% or less of what they earn monthly while the rest don’t even have a piggy bank to bank on (according to Money Under 30). According to a survey by Bankrate, 76% of the Americans live pay-check to pay-check while 50% of Americans have less than a 3-month cushion in their savings account and 27% have no savings at all.
Granted, it’s hard to save when most people have to deal with a number of loans along with bill payments. Millennials, in particular, face an uphill battle with a tough job market often coupled with crushing student loans. And, when you’re living pay-check to pay-check, spreadsheets aren’t always the first thing on your mind. Unless, of course, you let technology do the hard work for you.
Breaking news: smartphone apps can help you save money! Taking a cue from the old advice to ‘save small but daily,’ these apps attempt to eliminate the human factor to make savings more effortless. Although these apps have yet to gain wide adoption, those who are using them are reported to be seeing some success.
Case in point: Digit is one savings app which uses an ‘out of sight, out of mind’ approach. It uses an algorithm to analyse how much one might save in a month by reviewing your income and expenses. Since the app’s launch in February 2015, it has reportedly been successful helping users save more than $125 million. Then there’s’ Qapital, which helps users set up savings triggers to automatically put money toward a savings goals each time they buy from Starbucks or walk another mile. Qapital hopes this new feature gets more millennials saving toward their goals—and maybe paying more attention to how they’re spending money. While most of the apps give savings advice for free, some, like Acorns, go a step further and transfer funds into an investment account for a small fee.
Bottom Line for Investors
As the majority of Americans are challenged when it comes to saving, these free apps provide unique ways of overcoming these challenges. Additionally, these apps can work both for the not-so-good savers and the flagrantly extravagant and can provide inexpensive and low-risk ways to save. Best of all, you won’t have to go all Ebenezer Scrooge on your friends and loved ones—just a smartphone and the right app for you will work.
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