When someone asks me “What is the best way to save?”, my first piece of advice is that they should automate the process by dividing their paycheck (direct deposit) between a checking and savings account.  The next question inevitably is “What percentage should I save?” to which I respond, “As much as you reasonably can!” which requires an understanding of the ebbs and flows of one’s expenses throughout the month and year (in other words, a budget).

For the many, who treat budgeting with as much enthusiasm as a standard root canal, my advice is hard to implement.  The good news is that a gaggle of companies stand ready to help those budget averse consumers with apps to automate savings in more creative ways that leverage big data and behavioral finance/psychology to increase savings rates.

Ask your students to read this Kiplinger article and research one of the five featured apps:  Digit, SavedPlus, Simple, Acorns and Betterment.  Here are a list of questions you might use to guide them through their research process:

• How does the app work?  Walk through the process required to use the app.
• How does it automate and promote the savings process for individuals?
• If a free app, how do you think the app maker will make money?
• Do you believe that this app would work for you?  Why or why not?
• Review positive and negative reviews for the app.  Which arguments are most compelling to you?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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