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?