Want to Make Saving Automatic? There’s An App For That…

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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?