Want to Make Saving Automatic? There’s An App For That…
When someone asks me “What is the best way to save?”, my first piece of advice is that they should automate the process by dividing their paycheck (direct deposit) between a checking and savings account. The next question inevitably is “What percentage should I save?” to which I respond, “As much as you reasonably can!” which requires an understanding of the ebbs and flows of one’s expenses throughout the month and year (in other words, a budget).
For the many, who treat budgeting with as much enthusiasm as a standard root canal, my advice is hard to implement. The good news is that a gaggle of companies stand ready to help those budget averse consumers with apps to automate savings in more creative ways that leverage big data and behavioral finance/psychology to increase savings rates.
Ask your students to read this Kiplinger article and research one of the five featured apps: Digit, SavedPlus, Simple, Acorns and Betterment. Here are a list of questions you might use to guide them through their research process:
- How does the app work? Walk through the process required to use the app.
- How does it automate and promote the savings process for individuals?
- If a free app, how do you think the app maker will make money?
- Do you believe that this app would work for you? Why or why not?
- Review positive and negative reviews for the app. Which arguments are most compelling to you?
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.