Lots of people dream of a future in which they don’t have to worry about money, and can simply live off the returns they make from their savings and investments.
Getting there can feel like an uphill struggle, but round-up apps present an intriguing and modern alternative to traditional financial instruments. Let’s look at what they are, what they offer and which you should use in 2023.
The Magic of Spare Change: Understanding Round-Up Apps
In the world of personal finance, every penny counts. This saying holds a profound truth when it comes to round-up apps. But what are they?
Simply put, these tools work by rounding up your everyday purchases to the nearest dollar and saving or investing the difference automatically. For example, if you spent $5.20 on a coffee run, 80 cents would be ’rounded up’ and either saved or invested depending on your settings.
It’s like tossing spare change into a piggy bank. But instead of forgetting about this money until you need some quarters for laundry, it’s silently amassing in an app-based repository, steadily contributing to your future financial freedom.
Shifting Your Saving Gear: How to Start with Round-Up Apps
Getting started with round-up apps is a simple yet impactful step. First, you need to choose an app that fits your personal finance objectives and lifestyle. Different apps offer various features and benefits, as we’ll discuss.
You then need to connect this app to your everyday debit or credit cards, and voila! Every purchase you make is now contributing to your savings in the background, without any extra effort on your end.
What’s more exciting about these tools is that they can help maximize your savings potential when linked up with a retirement account. Let’s say each of those little ’round-ups’ were not just going into a generic saving pot but are actually being funneled directly into an IRA or 401k plan. Imagine the incredible power of compounding doing magic over time!
Making Sense of Cents: Choosing the Right Round-Up App for You
When it comes to choosing a round-up app, there’s no shortage of options. However, some apps stand out due to their efficiency and features that prioritize users’ needs. Here are three top recommendations worth considering:
- Acorns: This user-friendly app allows you not only save but also invest your spare change into low-cost ETFs.
- Digit: Best known for its automatic savings feature, Digit analyzes your spending habits and adjusts how much it saves accordingly.
- Chime: A mobile banking app with an automated saving feature that lets you enjoy the benefits of both savings rounds-ups and weekly transfer.
Remember, picking the right round-up app requires considering what functionality best aligns with your financial goals, whether this be more focused on everyday saving or aimed towards long-term investment.
Time to Invest: Using Round-Up Apps for Investment Purposes
While most round-up apps function as a digital piggy bank to improve your financial planning long-term, some of them provide an opportunity to dive into the world of investing. So if you’re thinking about stepping up your finance game beyond saving, there are a few options to weigh up.
One of the best known is Stash. Unlike traditional round-up platforms, Stash lets its users choose their own stocks and bonds alongside its automatic sparing feature. This is a good option for anyone who’s got their ear to the ground regarding the markets, but who’d rather not risk a whole heap of capital on assets that might be at the riskier end of the spectrum.
Whatever the case, investing using these apps can be beneficial even with minimal financial knowledge. These tools handle much of the legwork allowing you to grow wealth piecemeal while learning more about investing at your own pace.
Of course even if you are only investing with pocket change, you shouldn’t put everything you have into a single asset class. Portfolio diversification is a good skill to learn and rule to stick to, and will serve you well as your nest egg grows over the years.
Your Financial Future Awaits! Achieving Freedom through Smart Coin Stacking and More
Round-up apps are a fantastic way to kick-start your savings and investment journey, but they aren’t the end-all-be-all of financial planning. For true financial freedom, consider these additional tips:
- Budgeting: Understand where every penny of your paycheck goes. This helps you track your expenses and make informed decisions about spending.
- Pay Down Debts: Instead of paying recurring interest charges over time, try allocating more funds toward outstanding debts.
- Boost Your Income: Look for side jobs or freelancing opportunities outside your regular job.
- Diversify assets: Don’t rely solely on one type of investment, but spread risk across multiple asset types or sectors, as mentioned earlier.
Maximizing the use of tools like round-up apps in tandem with broader personal finance strategies mentioned above means you can cultivate healthy money habits that pave a sturdy path towards lasting financial freedom.