Best Apps for Building Savings

Highlights

  • Review some different apps designed to help you build savings.
  • Some savings apps charge fees and some pay interest on money you deposit.
  • It's easy to try one out and see if it helps you save more efficiently and effectively.
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Use These Apps to Put Money Into Your Savings Account

Do you have a hard time doing some things that you know are best for you? It isn’t enough to know that a choice you make today is going to help you out down the road. Doing the right thing takes effort, and even a small effort can be daunting when you know you have to make it over and over and over before achieving a meaningful result. Forming a new, positive habit on your own is difficult. Even if you start with the right intentions, are you confident that you are going to keep it up for the long haul?

Many people struggle to build savings in their savings account. This is true even though they know that it is good for their overall financial health to have an emergency savings account, savings for down-payment on a home, or savings to use for retirement or investment accounts.

How do you do with efforts to put money in savings? Here are some apps designed to help you save money more effectively. Some are free and some have small costs. If you are struggling to save money, see if one of these apps can help you.

Digit

Digit wants to take the effort away from you, making it easy for you to save. All you really need is a small effort to set the process in motion and Digit does the rest, so you don't even have to think about it.

Setting up an account is easy. You need to link a bank account to your Digit account, but you don't need to have your checking account number and bank routing number. Digit issues you a savings account that is FDIC insured that it will use to receive deposits. 

The Digit App works by analyzing your spending habits. Digit figures out what you can afford to put into your savings account. It takes into account your income and the expenses visible in your checking account, (directly deposited paychecks, ATM withdrawals, debit card purchases, and bill payments). Digit's proprietary formula calculates what you can afford to put into savings. Digit takes what it determines you can afford from your checking account and deposits it into your Digit account. Don't worry that Digit will take money from your account that you need to pay your bills. Digit offers an overdraft guarantees that you will be reimbursed if a Digit withdrawal leads to an overdraft fee.

You save money without paying attention to it. Digit doesn't require you to maintain a minimum balance and you can take the money out of your Digit account any time you want to. 

The primary savings account Digit establishes is the rainy day fund. Digit recognizes how important it is to have a cushion should you experience an unexpected expense or loss in income.

Digit allows you to set specific, customized savings goals and the system can set aside your savings in separate buckets, e.g. a vacation fund, gift-giving fund, a debt pay off fund. You can easily monitor your progress and Digit notifies you when you hit a goal.

The money you save in your Digit account doesn't earn interest but it does result in a Savings Bonus paid quarterly. The interest is 1% APY and is based on the average daily holdings of your Digit savings account.

Digit used to be free, but it now costs $2.99 month. It seems counter-intuitive to pay money to save money. A better way to look at it is to weigh whether it helps you save, comparing what you save using Digit and how you do on your own. Sure, the fee is not ideal, but if you spend $36 bucks a year and end up with $2,000 in savings that you would have let slide through your fingers by spending it on something or other, the expense seems well worthwhile.

How Much Will You Save Using Digit?

How much you end of saving is based on your unique circumstances. Using Digit won't result in building savings if your normal bills use all your income each month or if you spend money in an undisciplined way. In that case, Digit is not worth the cost and you should focus on reviewing your budget and cutting out unnecessary expenses.

Digit will automatically determine when to safely save towards your goal and will store the funds in a separate bucket than your Rainy Day Fund.  When the goal is reached, Digit will notify you that your funds are available for withdrawal.

Tips for Using Digit

Digit isn't a mind-reader. Make sure all bills you pay and income you receive are tied to the checking account you connect to Digit.

Qapital

Qapital is another app built to help you build savings. Qapital says, ambitiously, that it:

  • Will help you "Discover true money happiness."
  • Makes it easy to fund your future and take care of yourself now, too. 
  • Offers you a "complete financial solution." That includes spending wisely, saving for short-term and long-term goals, and investing your savings.

Types of Accounts

There are different types of accounts you use to work with Qapital. You link your personal checking account, called your Funding Account, to Qapital. Qapital uses your Funding Account to put the money into your Spending Account that Qapital sets up with a banking partner. The current interest rate you will earn on money in your Spending Account, as of March 2019, is .01%. If you have $1,000 earning .01% interest for one year that would yield one shiny dime in interest. Yep, 10 cents.

Using Goals and Rules to Make Smart Choices

Qapital aims to make saving money fun, which increases your odds of succeeding in saving. They use "Goals and Rules" to help you save smartly. You set goals to save moeny for a purpose that is important to you. Choose goals Qapital suggests, to save money for a vacation, rainy day, or college, or make your own goals. 

Qapital includes a social component, so you can join with friends or family and team up to reach joint goals. All the team can see the progress as you build up savings. 

The money to pay for your goals comes from your Qapital account. The money gets into your Qapital funding account based on the Rules you set up, and is used to meet the Goals you set.

  1. IFTTT Rule - This is tied to a separate app, IFTTT (which stands for If This Then That) that triggers a deposit into your account if activity on other apps, devices, or on the internet. Make it as quirky a rule as you want
  2. Apple Health Rule- This rule is restricted to Apple Health users. You set a target for some activity in Apple Health, setting aside savings when you hit the targeted # of steps in day, distance you run, etc.
  3. 52 Week Rule - A way to save money that starts slow, while you are building the savings habit. By the end of the year, you are setting aside a good chunk of money each week. The first week, you save $1, the second week you save $2, and build up to the point where you save $52 the last week. The total you will save over one year is $1,378.
  4. Freelancer Rule - Freelance work often receives irregular compensation, and when you work as a freelancer, taxes are not taken out of your pay. For both reasons, it is smart to build savings as a freelancer, so you have money to cover expenses when income is not flowing, and to cover taxes when they are due.
  5. Spend Less Rule - If you spend less on a budget category you select, the difference between what you spend and the target you set gets deposited to your savings account.
  6. Guilty Pleasure Rule - This rule helps you link spending on items you don't need with a positive act of setting aside money in savings each time you do it. 
  7. Round Up Rule - You set a formula for increasing the amount of your purchases. You decide on the amount. For example, you can set a fraction of a dollar aside with every purchase by rounding up to the nearest dollar. You can set it for any other dollar amount you wish.
  8. Payday Rule - Set aside a specific percentage of your directly-deposited paycheck.
  9. Set & Forget Rule - Set a specific dollar amount you choose on a daily, weekly, or monthly basis.

Qapital's Rules and Goals are smart ways of forming new habits.

Investment Option

Another important habit Qapital encourages is putting money into investments. They make it easy to invest for people without any investment experience. Qapital uses the robo-investment model, where you make some simple choices presented in the app and don't speak with an investment advisor. You choose the level of risk you find acceptable for investing in Exchange-Traded Fund (ETF) holdings. ETFs are attractive because they offer you diversity of investment with only a small minimum dollar amount required. 

Some Downsides of Using Qapital

Qapital's negatives include:

  • Fees - Qapital used to be free. Now, after a free 30-day trial, you have three membership levels to choose from that have a monthly fee. $3 for Basic, $6 for Complete, and $12 for Master. 
  • Support - Qapital doesn't want to talk to you. Likely to control costs, Qapital doesn't offer phone in help. You can send an email or use an in-app feature to access support.
  • Interest Rate - .01%, as mentioned above, is well below what you can earn in no-risk savings. Compare that rate to the rates currently available elsewhere, on the table below.

Tip Yourself

Tip Yourself wants you to think about saving differently. They don't want you to focus on the sacrifices you make when you forego a purchase so you can put the money into savings. Instead, focus on the freedom that your savings will give, as they allow you to move forward with life plans that require money. A Tip Yourself blogpost states, very nicely, "Money in the bank is not money you’ve decided not to spend. Money in the bank is freedom."

Tip Yourself encourages you to focus on changing your habits and not on the money that you are saving. In part because the payoff on many of the behaviors is small, they make an impact when you look at the long-term. Take a look at what can happen if a small amount is deposited and left to earn interest for a long period of time, by using the Bills.com Ways to Save Calculator.

Tip Yourself believes that the biggest obstacle to building savings is the belief that you need to make substantial deposits into your savings account. They take the opposite approach, that putting in little amounts regularly is effective and habit-forming.

Using Tip Yourself

Tip Yourself makes it easy to set up an account, link your bank account, and get started saving money. Tip Yourself focuses on the positive, as demonstrated in their motto "You Earned It." Make a virtuous choice that saves you money (bike to work, make a lunch instead of eating out, skip seeing a movie at the theater and watch something with friends using a Netflix account) and then reward your choice by putting some money in your tip jar.

It isn't necessary to have a savings budget established. Tip Yourself encourages you to find ways to reduce your expenses and then, instead of spending what you saved, moving it into "Tip Jar."

You choose when to tip yourself and the specific goal you are saving for in your "Tip Jar." Stick to your exercise goals for the week? Tip yourself $5 or whatever dollar amount feels right. Put it in your "Holiday Shopping" Tip Jar or any Tip Jar you create. Tip Yourself strongly believes that putting little amounts here and there not only adds up but creates a momentum to save. As you see the money building up, the fact that it was so easy to do it with small deposits, your desire to reach your goal keeps you moving forward and even build savings faster.

Tip Yourself is not against you putting larger tips in your tip jar. One way they suggest making a larger deposit is to find a signficant savings when you review your budget and automatically have the money move into your Tip Jar. For example, let's say that you save $60 a month by canceling your Cable TV. You then set the app to put the $60 in your Tip Jar the same day you used to pay the Cable bill.

Share the News

It is easy to monitor how much is building up in any of your Tip Jars. Tip Yourself recommends that you can help yourself and others by being part of the Tip Yourself Facebook group. Sharing your smart choices with others and hearing about theirs reinforces the savings habit.

No Interest Paid

Money you hold in Tip Jars earns no interest Tip Yourself charges no fees, but does keep any interest earned for itself. As you reach goals, move money into an account that pays interest.

SmartyPig

SmartyPig takes the old-fashioned piggy bank (didn't you have a piggy bank as a kid?) and brings it into the high-tech era. SmartyPig is another savings tool that recommends that you tie your savings to goals you set, to increase your motivation and encourage your success

Using Smarty Pig

It takes only a few minutes to get set up with SmartyPig and link your bank account. The next step is choosing your savings goals. SmartyPig offers you a free savings account for each goal you set up. They believe that it is easier to plan realistic goals and monitor your progress reaching them when you can view them separately. SmartyPig also believes that setting and monitoring your goals reinforces the habit of saving, as you see the reward of growing savings.

SmartyPig can be used for long-term goals like saving for a down-payment, college education, or vehicle purchase, or for short-term goals you want to achieve, like a vacation to a sunny beach resort, paying for holiday gifts, or a child's birthday party.

SmartyPig recommends setting up recurring deposits, whether it is out of each paycheck, weekly, or whatever works for you. Setting up automatic payments makes it easy, removes effort, and reduces the temptation to use the money for something else.

The Social Media aspect is important in reinforcing your progress. SmartyPig makes it easy to share things with people on Twitter and Facebook. When you share, others see your progress and are motivated in their savings efforts. You will receive encouragement from others, and some may even support your effort for an important savings goal by kicking in a few bucks. 

This Pig Pays More

SmartyPig differentiates itself form other savings apps in a few different ways. The most important is by paying a higher interest. Currently, as of March 2019, money in SmartyPig savings accounts earn 1.80% APY.

One benefit that SmartyPig calls out on its homepage is that you can earn even higher interest when you have more money in your accounts. They show four tiers ($.01-$2,500; $2,500.01-$10,000; $10,000.01-$50,000; and $50,000+), but as of March 2019, all levels receive the same 1.80% APY interest. Seems like they used to offer different rates for different tiers, but didn't change the language on the page when they set the rates for all tiers at the same rate.

SmartyPig charges no fees for its services. No matter how many separate savings accounts you set up, there is no fee.

Federal regulation prohibits more than 6 withdrawals per Account per statement cycle. You are allowed to make 6 withdrawals each month from each of your goal Goal accounts and and six withdrawals from your SmartyPig Primary Account every month of your account cycle.

Interest Rate is Higher, but...

Smarty Pig's higher interest is better, but keep in mind that $1,000 at 1.8% earns $10.80 over a year. That is many times better than the 10 cents Qapital would bring, but the $10.70 difference that SmartyPig puts in your pocket isn't enough to cover the cost of one movie theater ticket.

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