3 startups that want to get millennials saving money

Before you go, we thought you'd like these...
Before you go close icon
Super Saver Shares Money Saving Tips

NEW YORK (AP) — Millennials, it's time to pick up the phone and start saving.

That's the message from digital saving companies such as Acorns, Digit and Stash that cater to people under 35. They offer services for the smartphone that aim to be easy to use, have low fees and don't require large deposits. Stash, for example, lets users invest in the stock market for as little as $5. Digit and Acorns, meanwhile, do the work for savers by automatically transferring small amounts from a checking account to saving or investment accounts.

"I think that these apps are useful," says Paul Golden, a spokesman for the nonprofit National Endowment for Financial Education, because they teach people the habit of putting small amounts of money into savings.

The startups, all of which launched in the last year and a half, say they are targeting young people that have been ignored by traditional banks and brokerage firms. Many of them charge fees or require a minimum opening deposit that may be too high for some millennials.

"By and large big banks and brokerage firms are not focused on millennials," says Douglas A. Boneparth, a certified financial planner and partner at Life and Wealth Planning, which advises many millennials. "They are more focused on baby boomers that have assets today."

Saving money can be a challenge for millennials because many are saddled with student loan debt, says Boneparth. But he warns that those who want to use the apps still need to come up with financial plans and goals, like knowing what they are saving for and a plan to reach that goal, instead of just setting their savings on autopilot and forgetting it.

Here's a look at how some of the services work:


WHAT IT DOES: The app automatically puts money away for users by rounding up every credit or debit card purchase they make. For example, a $9.95 purchase at a grocery store will get savers 5 cents in an Acorns account.

HOW IT WORKS: Users link their credit or debit cards to the app for the round-up feature or can set up recurring automatic deposits to Acorns. Money is invested in a portfolio of exchange traded funds, which are a basket of stocks or bonds.

WHAT IT COSTS: $1 per month for balances below $5,000 and 0.25 percent per year for balances above $5,000.

CHASING MILLENNIALS: College students can use Acorns for free.

ONLINE: https://www.acorns.com


WHAT IT DOES: Digit links to a checking account and its algorithm looks at account activity to figure out how much you typically earn and spend. Based on that, it transfers small amounts into a Digit account.

HOW IT WORKS: Sign up is done on its website and Digit communicates with users through text messages. An app for Digit is in the works.

WHAT IT COSTS: Nothing, but since Digit communicates though text messages you may rack up texting fees.

CHASING MILLENNIALS: Digit tries to bring some fun to saving by sending users animated images, known as GIFs, when they reach a savings milestone. The first time money is deposited into a Digit account, for example, it sends a GIF of cartoon character Scrooge McDuck diving into a pile of gold coins.

ONLINE: https://digit.co


WHAT IT DOES: The app lets users invest in about 30 different ETFs of their choosing.

HOW IT WORKS: Users link their checking accounts to invest in the ETFs.

WHAT IT COSTS: $1 per month for balances below $5,000 or 0.25 percent per year for balances above $5,000.

CHASING MILLENNIALS: Stash tries to simplify the stock market for first-time investors. ETFs, for example, have been renamed. The Global X Social Media Index ETF is called Social Media Mania on Stash and invests in LinkedIn Corp., Facebook Inc. and other stocks. Stash also has a glossary throughout the app, explaining what a ticker symbol is or what historical performance means.

ONLINE: https://www.stashinvest.com


Follow Joseph Pisani at http://twitter.com/josephpisani . His work can be found at http://bigstory.ap.org/author/joseph-pisani .

See money saving tips below:

Easy ways to put more money in your pocket
See Gallery
3 startups that want to get millennials saving money

Automate your finances. 

Set up your finances so that money is taken straight from your paycheck and deposited directly into your savings account or a retirement savings account. You can also set up your fixed bills like your Internet and cable to be automatically deducted from your checking account. Automate your finances to save time and prevent overspending. If you see extra money in your account, chances are you’ll find a way to spend it, leaving you little to invest in your future. Automation helps keep your priorities in line so that as money comes in, it is dispersed to your other accounts immediately.

(Photo: Getty)

Cut back. 

At least twice a year, look at your expenses line by line and see if you’re getting the most bang for your buck. For example, do you read the magazines you subscribe to or maximize that gym membership? If the answer is “no,” consider canceling or negotiating a better rate. Take that money you save, and apply it toward bigger payoffs like debt reduction, retirement or an emergency fund.   

(Photo: Getty)

Get rewards. 

Lots of people use debit cards to make it easy to buy and budget for groceries, gas and other routine purchases. Instead of doing that, look into a credit card with a great rewards program for those daily purchases, and set it up to automatically pay the statement balance from your checking account each month. Over the course of the year, you could potentially pocket a few extra hundred dollars just by using a card with a good rewards program instead of your ordinary debit card (just make sure you’re paying off your credit card every month, so you don’t pay extra in interest).

(Photo: Getty)

Boost your income. 

If you love your job and want to grow your career, it's time to think about boosting your income as well. Make it a goal to negotiate a raise this year. Consider your strengths and look at the value you've provided to your company over the last six months to a year, and discuss it during a performance review. This can feel intimidating, but it never hurts to ask.

(Photo: Getty)

Get a side gig. 

Take advantage of your skills, or turn a hobby into profit. Doing so can help you generate extra income – which you can put toward reaching your financial goals. Etsy, for example, is a great place to sell one-of-a-kind products.  If you have Web design, copy editing or other creative skills, consider offering your services on freelance websites such as Fiverr or Elance. These types of side gigs will allow you to earn extra income while also growing your skills.

(Photo: Getty)

Track your progress. 

You can’t save money if you don't know where your money is going. Every month, track your net worth using a personal finance tool or app that will show you exactly where your money is going. This will make you think about your entire financial picture from income and expenses to investments and taxes. With this focus, you can ultimately make the greatest impact on your finances in 2015.

(Photo: Getty)


Read Full Story

From Our Partners