How apps can help to save money

Saving money has come a long way from putting spare change in a jar. These days, apps that help save money can take all the hard work out of making deposits and tracking progress, making it easier to reach financial goals.

Here's how apps that help save money generally work: The app lets the user set a goal for how much they want to save while asking the user to link a checking account or debit card so it can draw funds. For some apps, it will round each purchase up to the nearest dollar and sweep the extra change into a savings account. Other apps work by automatically deducting a fixed amount from the user’s checking account on a regular basis and placing it in an investment or savings account.

What is a money savings app?

Savings apps differ from actual savings accounts — while they can work in tandem (often, a savings app can deposit money into a user’s savings account), these kinds of apps are meant to assist someone's savings, facilitating the transfer of money to an account or working as an investment tool. This is an important distinction to savings accounts offered by financial providers or banking institutions, which operate as typical financial accounts that offer growth on the money in an account via interest rates.

Most of these apps designed to assist with saving money can be customized to let the user choose how much they want to save and how often they want to make deposits. Users can allocate savings as they see fit, tailoring the savings strategy to meet their specific goals.

Savings apps may also include incentives to use the app's partnering banks or retailers, offering additional benefits to the user. If looking to use a savings app, be sure to check on any additional offers or incentives the app or service may have available to ensure you’re getting the most out of your saving strategy.

Potential benefits of savings apps

Savings apps can be great for helping someone grow their money with minimal effort. They can be particularly useful as they help automate the act of saving, making it so a user doesn’t necessarily have to set reminders to transfer money into their savings account as they may need to do if manually moving money into their savings account.

They can also be a great tool for helping manage finances, being more proactive with budgeting, and can potentially aid in meeting financial goals — whether that’s building an emergency fund, saving up for a house, or anything in between. Here are a couple of the main appeals of savings apps.

Ease

Many savings apps are accessible on your computer, smartphone, or tablet. Most apps are designed to help the user start saving right away without having to make a large deposit. For some, the user just needs to link a spending account (i.e., a bank account or debit card), identify their savings goals, and the app will begin to do the saving work for them — whether that is rounding up the cents from a purchase and saving them, investing, or just directly pulling a recurring amount to save.

Plus, apps that keep track of money saved let the user see their savings at a glance instead of having to track down their money across accounts.

Simplicity

Money saving apps can help make it easier to meet financial goals. Instead of manually transferring money over to savings each month, a user can automatically move money over on a daily, weekly, or monthly basis. This can help someone switch their focus to other things in life with potentially less stress about savings.

Considerations when choosing a money savings app

While these apps can help one meet their savings goals, there are different aspects to assess that may determine whether an app of this kind is right for someone’s needs. While there are a plethora of factors to consider, below are a couple of things to keep in mind before choosing an app.

Fees

Some apps charge a monthly fee to use their service or early withdrawal fees. These fees can add up over time and chip away at savings, especially if only saving a small amount each month. It’s important to understand the full terms and conditions and any associated risks.

Decision making

These apps can't force someone to save. All they can do is help automate the process. If the user aims to save money but then takes the cash out for a random purchase, the app won't stop them.

Ultimately, money saving apps can be a powerful tool to help someone reach their financial goals. By leveraging the ease, simplicity, and automation of these apps, it can potentially help in moving toward a more secure financial future. But it’s important to remember that they are just a tool for the saving journey — the method with which someone saves, how much they save, and fees associated with the apps can all affect their impact and ability to aid savings goals.