With recent research showing the majority of young Australians are not on track with their saving plans, investment start-up app Acorns has found a new way to help people save.
The company has developed an app that links to your debit card, rounds up your transactions and invests the ‘change’ in the market across five portfolios. For example, if you buy a coffee for $3.60, the app rounds this figure up to the nearest whole dollar and invests the 40c in stocks. It also helps simplify the stock market for young people.
A survey, commissioned by Acorns, asked more than 1000 Australians aged between 18 and 39 about their saving habits, revealing that only one in eight (13 per cent) felt they were in a good savings position. When it comes to future planning, 66 per cent admitted to having either a savings plan that wasn't working, or no plan at all.
The figures also revealed a stark contrast in the patterns of saving between men and women.
Nearly a third (32 per cent) of men admitted to having no savings plan, compared to a fifth (21 per cent) of women.
Men were also almost twice as likely to be struggling to cover expenses as women were, with 19 per cent and 10 per cent respectively.
Acorns managing director George Lucas told The Huffington Post Australia many of us needed to change our behaviour around the concept of saving.
“If we look at the messages that young people hear around the rising cost of property and the cost of living, I think that this generation has been told that it should be hard for them to save, and therefore they have fallen into a trap of not saving,” Lucas said.
“We found was that women are better at saving, yet more women than men believe they don’t have enough to save.
"This could be down to perceptions and the confidence of men in comparison to women when it comes to finance.
"We also found more men were interested in activities such as investing in the sharemarket compared to women, which is traditionally viewed as a risky activity.
"Everyone can save, it’s down to how they perceive and prioritise saving.”
Lucas said technology could play a major role in helping people become savvier when it comes to savings plans.
“Automatically rounding up their everyday purchases and invest the change is linking spending -- which is something we all understand -- with saving.
"Using technology in this way opens investment to young people in a completely new way, and breaks down the access barriers that younger people face when looking to get started saving.”
The Acorns app will launch in January, 2016.
Other apps that help people save:
Unsplurge forces you to focus on saving with visual and community elements. It starts with a simple question: What do you want to save for? You tell the app the answer, enter an amount, and upload a photo. It then tracks your progress and shows you visualisations, making your goal more tangible.
Toshl Finance app creates a budget or spending plan customised for you. Select a budget type by timeframe (one-time, daily, weekly, biweekly, monthly, or yearly), and choose a starting date. From there, you need to manually enter every expense and all earned income so that you can see how it sums up.
Daily Budget works by calculating a daily budget, based on your income and recurring expenses, such as rent, internet, phone etc. It asks you what percentage of your income you want to save. Then the app breaks down that number to a percentage per day and month, which makes your savings goals feel more realistic. From there, it gives you a total daily budget number to stick to.
The Australian Securities and Investments Commission (ASIC) also has an online savings calculator that lets you set a budget and decide how much money you want to spend and how much you want to save.