Saving money is hard.
The average American faces over $90,000 in debt, a significant bundle of financial obligations, and a steadily increasing cost of living. According to a survey by the Federal Reserve, over a third of Americans are unable to cover an emergency $400 expense. Saving up to buy your first home, paying off your student loans, or even just building up a rainy day fund takes a lot longer than it used to.
But not all the news is terrible. It's the era of autonomy, and regular people are taking control of everything from DIY home sales to their investment portfolio. A new generation of finance and savings apps make it easier than ever to automate your savings and investments, so you don't have to rely on go-betweens anymore.
The following apps will put money away for you without you having to lift a finger. They'll allocate it to various investment vehicles, help put your finances in the context of your peers, help you trim hidden, wasteful recurring expenses, manage your budget, and even help you efficiently pay down your debt.
Let's get into the list and start growing your nest egg!
This popular app is built on a straightforward premise: Every time you make a purchase, it rounds up to the nearest dollar and puts the difference into your investment account. So if you buy a soda for $1.49, that extra 51 cents gets put right into your Acorns investment account. It happens without thinking about it, and it can add up over time.
Where exactly does that money go? Into your Acorns investment account, where it's invested into an ETF. ETF stands for “exchange-traded fund,” which is a bundle of different types of investments, including things like stocks, bonds, commodities, etc. You can choose the specific ETF your money is going into, from more aggressive ones to conservative ones or even to funds focused on sustainable investments.
Remember that since your money is actively invested in an ETF and not sitting around in a savings account, it may take a few days to withdraw your balance.
Acorns cost $3 a month, and you get a checking, investment, and retirement account. For $5 a month, a family account adds investment accounts for your children. Acorns also offer a linked debit card with various perks, such as discounts on specific brands, fee-free ATM use, and payday advances.
One of the biggest obstacles to saving more money is debt, especially high-interest debt like credit cards. Tally helps you pay off debt faster, more efficiently, and at a lower interest rate than going it alone.
How does it work? First, you upload your credit cards and personal info, and Tally runs a credit check. If you qualify (generally, a FICO score in the neighborhood of 580 is required to qualify), Tally will offer you a low-interest line of credit.
If you accept, they'll immediately use your Tally line of credit to pay off your credit cards. From then on, you'll make one consolidated monthly payment directly to Tally instead of having to pay off all your credit cards individually.
If you make your payments on time, you'll have bonuses applied to your balance, paying it down even faster. Tally's study of several years of user data found their average user saved well over $4,000 in interest, so it's something to think about if you're carrying credit card debt.
3. Credit Karma
Your credit score informs so much of your financial situation, and Credit Karma is the industry leader in managing your credit profile. The company claims that half of all U.S. millennials are Credit Karma users.
It's pretty straightforward: Credit Karma will tell you what your credit score is, but without damaging it. (Just having a conventional credit check run on you will usually ding your credit score a bit.) Credit Karma will then explain the logic behind your score, and suggest ways to improve your credit score.
Credit Karma also offers free checking, and the app is totally free.
Qapital is similar to Acorns, but it puts them into a savings account instead of investing your pennies. It uses the same “round up to the next dollar” principle to skim small amounts of money off each of your purchases and then transfers that money into a bank account. It also lets you set concrete savings goals that Qapital will auto-transfer into your savings account.
Qapital costs $3 to $12 per month, with higher tiers unlocking features like a debit card, customized savings and investing options, and a financial “Dream Team” of family and friends with whom you can share financial transactions or send money.
Best of all, Qapital pays you 0.1% interest on the money you put away. All in all, it's like Acorns, but for putting away a nest egg as opposed to investing in the market.
Digit is another savings app, though it's a bit bolder than the previous apps on this list. While Qapital or Acorns uses your transactions to put bits of money away — never more than a dollar at a time — Digit analyzes your spending and your financial situation with algorithms and decides how much you can afford to save and when. Then it'll periodically put that money away into a savings account.
While the prospect of an app deciding how much money you can spare and siphoning it off without your express approval beforehand can be a little hair-raising, the Digit founder has said that for most users, the app will put away an average of $18 every two or three days. That equals around $2,100 of savings a year, which is a pretty nice savings rate compared to the average American.
One potential pitfall with Digit is that their automated transactions can potentially lead to overdrafts if your balance is low. Digit has some built-in features that aim to prevent this, such as setting a balance threshold below which Digit will suspend automatic deductions. If overdrafts do happen, they'll reimburse you for a certain number of them.
6. Status Money
Status is an exciting hybrid of a straightforward financial app with a touch of social media. It's built on a simple insight: Since most people only know their financial situation, they often lack the perspective necessary to negotiate, say, lower rent, a better salary, or a more favorable interest rate.
Status users can contextualize their financial situation by comparing themselves to their peers in everything from how much they earn, debt-to-income ratio, rent, discretionary spending, and interest rates. (Note that this financial information is anonymized; you won't see your coworker's name and how much they pay in rent.)
For example, you might learn that you spend significantly more than your peers eating at restaurants. A recent study of Status users found that people who learned they were overspending relative to their peers cut their monthly spending by $600 per month, on average. That's a powerful testimonial to the effectiveness of peer pressure — and this app.
The downside here is apparent: learning that you're making a lot less or spending a lot more than your peers can be discomfiting. But it can also be great motivation.
While this app is slightly different from the ones listed above, we think it deserves an honorable mention. Short for You Need a Budget, YNAB is a unique budgeting app that helps you get a month ahead on your bills and expenses by budgeting only the money you have on hand.
Unlike other budgeting apps, YNAB doesn't budget the money you plan to receive in the future, helping you break the paycheck-to-paycheck cycle, thus freeing up more money for you to save and invest.
YNAB offers a 34-FREE day trial, which is a great opportunity to really get a feel for the app (available on desktop and mobile) and make sure it's a good fit.
This article was produced by Wealth of Geeks.
Featured Image: Wealth of Geeks.