Americans are generally lackluster savers. Forty-one percent of households lack liquid savings to cover an unexpected $2,000 expense, according to research from the Pew Charitable Trusts, which also found that a lack of saving is a top financial worry â€“ even among families with higher incomes.
Also, one in three American families reports having no savings, including 1 in 10 of those with annual incomes greater than $100,000. Recent Federal data show the overall personal savings rate in the United States is about 5 percent, and an analysis by Moodyâ€™s Analytics finds that Americans under 35 actually have a negative savings rate, meaning they are spending more than they earn.
Why is it so hard to save money? For one thing, our consumer culture is designed to encourage spending. Think about it, every coffee shop wants you to buy another cup of coffee, and the technology used today is making that cup of coffee much easier to buy as well. Think of the convenience of using Uber: With the tap of a phone, a car ride appears.
Following through with your savings goals each month can be tough. Having the willpower to funnel your hard-earned cash into savings accounts for the future can be even harder. If you struggle with savings, these three apps can be a good start to automating your savings.
Digit is a text message based app that checks your checking account balance and learns your income and expense schedule, then automatically deducts a small amount on a random basis to deposit into a Digit savings account.
You literally do nothing and your savings account balance begins to grow. The withdrawals are based on your income and predicted expenses, and the app guarantees it will never cause an overdraft or will reimburse you for the cost up to two times per customer. It works with over 2,500 banks and credit unions around the United States. Withdraw your funds via a text message command and have your cash back in your checking account as soon as the next day or second day.
Digit is free to use and pays a small interest on your savings balance.
Dobot is an iOS and Android bot that automatically withdraws a small amount from your checking account on a schedule you choose to help you save for specific goals. Whether you are looking to save for a new car, a trip around the world or for your childâ€™s braces, Dobot can help you make it happen.
Signing up is quick and easy, and each week when Dobot withdraws from your checking account, you can pick which goal or goals to send the funds to. The Dobot app shows your progress toward each goal so you can keep track of where to place money next. Add extra or withdraw back to your checking at any time from the app, or leave the money there and watch your balances grow to reach your goals.
Dobot is completely free to use.
Each time you spend money with a credit card or debit card, it likely ends in an odd number of cents. Acorns round up your transactions to the next dollar, then invests the funds for you in a diverse portfolio of stocks and bonds through low-cost ETFs. When signing up, each user fills out a brief survey on risk tolerance, and investments are made for you based on that criteria.
Acorns charge $1 per month for portfolios up to $5,000, then 0.25% of your account balance annually. Students with a .edu email address can use Acorns for free for up to four years after registration.
Honorable Mention: Personal Finance Tracking Apps
Sometimes you donâ€™t want to trust an app to automatically take money from your checking account on a random or weekly basis. If you would rather handle things manually, there are still great apps to help you track your finances and goals.
Tools like Mint.com allow you to track your account balances and tie them to specific goals, while budgeting first software like You Need a Budget (or YNAB) let you assign each dollar a job that could include saving for anything you dream of. Learn about Mint.com and alternatives at this handy guide.
Savings Unlock Future Freedom
Just going on a vacation or buying a car is a financial decision that most of us donâ€™t have the luxury of making on a whim. That shouldnâ€™t discourage you from dreaming or setting expensive goals though. Take the time to set yourself up for long-term savings until you can live your dream without debt, and youâ€™ll find yourself happier and in a better financial position.
Saving money on your own can be tough, so try these three apps to get you started. Youâ€™ll be jetting off across the world before you know it!