By MELANIE LOCKERT
When it comes to mastering your finances, it's not just about how much you earn, but also about how much you save. Putting away cash for a rainy day, retirement and even just for fun is all part of having a balanced financial portfolio.
But let's face it: Saving can be tough. It often feels like there's never enough money after paying your bills. If you're having trouble making saving a priority, these three tools might be able to transform your savings habit from struggle to success.
One savings app making waves in personal finance is Digit. Digit helps its users automatically save money, without them having to think about it.
After you connect your checking account to Digit, it looks over your income and spending habits to analyze how much you can save each month. Every couple of days, Digit transfers funds from your checking account into your Digit savings account. The amounts are typically small -- between $5 and $50. The goal is that Digit will transfer small amounts you'll hardly notice, which will add up over time to build a nice savings cushion.
Digit has a no-overdraft guarantee, and they say they'll never transfer more than you can afford.
Jackie Lam, founder of personal finance blog Cheapsters, appreciates that she can manually transfer money and choose when to save more aggressively. "It's pretty much effortless," she says. "I also love the daily texts I receive letting me know the balance of my checking account."
Digit is free, however, you don't accrue interest like in a traditional savings account. Instead, you get savings bonuses every three months -- 5 cents for every $100 you save.
Grayson Bell, the blogger behind Debt Roundup, started using Digit after feeling bored with his current savings strategy. "I was getting complacent and had an ongoing transfer from my checking into my savings for years. Digit allowed me to break outside of that automation and save money I didn't think I had available to save," he says.
While Digit may seem like the perfect cure to a bad savings habit, it could make you less mindful of your finances. Personal finance expert Jim Wang of Wallet Hacks tried Digit for a month but says, "It supports being lazy about your money and not paying attention to it, and the fact that it moves it into a noninterest-bearing account somewhere just adds complexity to my life."
Digit could be a great tool for those who have trouble prioritizing saving. Just be aware that you won't earn interest on your money like a traditional savings account.
As a kid, you might've had a piggy bank to stash your change and save for a treat. With SmartyPig, you can use that same philosophy -- SmartyPig is a free online piggy bank that empowers users to save and reach their financial goals.
When you sign up with SmartyPig, you can create several specific goals such as saving for a vacation or a new computer. You then link to a checking account, create a timeline of when you want to reach your savings goal and set up automatic transfers to help reach your goal. SmartyPig is free and has no fees, and unlike Digit, you accrue interest on your savings. Currently, SmartyPig holds your money at BBVA Compass, an FDIC-insured bank, and has a 0.75 percent annual percentage yield.
SmartyPig also allows your friends and family to contribute to your savings goals, although it'll cost you a 2.9 percent convenience fee, so you won't receive the entire contribution. Instead of birthday presents or gifts during the holidays, consider asking whether your loved ones would be willing to contribute to your goal instead.
Once you've reached your target, you can get additional savings when you place your funds on certain retail gift cards. You could get what SmartyPig calls a "cash boost" of up to 11 percent through one of their partners. This means that if you use SmartyPig to save $1,000 and put it onto a Macy's gift card, SmartyPig will give you an additional 11 percent, and you'll walk away with a $1,110 gift card.
You could mimic SmartyPig's core offering by opening a savings account, setting up auto-transfers and asking friends and family to contribute to your goal. However, SmartyPig can be a great tool if you want to save for something specific and visualize your goal. Harlan Landes of Adulting.tv, for example, saved for a new camera. "I love that it helped me focus on one savings goal at a time," he says.
Digit and SmartyPig can be great for smaller savings goals, like a vacation or a new computer, but what about those big-ticket purchases like a home or a car? Using BoostUp, a free savings platform, you can do just that.
BoostUp was specifically designed to help users save for large purchases. Users who sign up for a free account and make automated weekly or monthly deposits could get a portion of their savings matched by BoostUp partners.
For example, if you choose to go through BoostUp to find a real estate agent, you could be eligible for up to a $1,500 savings match. Keep in mind, though, that the number of partners that can match your funds is limited and you won't receive a savings match if you don't use one of their partners. However, you can get gifts from your family to go toward your down payment or vehicle purchase.
"I started the company because I wanted to help people save and reach their goals, just like my parents had helped me," says John Morgan, founder and CEO of BoostUp. "I learned the power of saving, and with their match, I was able to buy my first car."
While BoostUp can be a convenient way for you to save for large purchases, it does come with some downsides. Currently, there isn't an app for the platform. In addition, while money in your BoostUp account is held at Fifth Third Bank, you won't earn any interest on the funds in your account. Finally, you can only have a maximum of $10,000 in your account.
Saving money may seem like a difficult chore, but with these tools, you might be able to save for your financial goals, both big and small. Before opting for one of these savings platforms, read the fine print and understand any limitations. If you're having trouble reaching your savings goals, these tools can help you get there.
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