Banking 101: The Best Money-Saving Apps

Many Americans are on shaky financial ground. According to a 2018 report from the Federal Reserve, 40% of people wouldn’t have the money to cover an unexpected expense of $400 or would have to sell something or borrow money to do so.

The good news is that technology makes saving money easier than ever today. There are apps that can help you set goals, store money and put you on a path to a solid financial future.

Robert R. Johnson, a professor of finance at Creighton University in Nebraska, said people should try to automate as many financial decisions as they can. “One has to make saving and investing money a habit,” he said. “Habits — good or bad — develop over time. One of the best ways to save money is to make it automatic.”

He said money-saving apps cater to our psychological bias for activities in which we see success. Some apps also offer game-like elements that can make saving fun.

How money-saving apps work

Money-saving apps are designed to help you reach your short- and long-term financial goals by automating financial decisions.

There are two primary types of money-saving apps — those that funnel into a savings account and those that funnel into an investment account. There are some hybrid apps that do both.

While each app offers something different, they all offer a type of set-it-and-forget-it savings. For example, many offer options where the amount of your daily purchases is rounded up to the nearest dollar, with the remainder going into savings. So, if you buy a cup of coffee for $3.25, 75 cents is sent to your savings. Over time, those small amounts can add up.

Dave Lowell, a certified financial planner in Salt Lake City, said money-saving apps are a great way to get people to start saving, which is often the most difficult part.

“(Money-saving apps) can help people realize that they can save, and they start to see the balance of their savings add up,” he said. “They don't have to overcome the mental barrier of starting to save because the apps do it for them.”

However, Lowell cautions that these apps aren’t generally enough to help you achieve your long-term financial goals.

“Saving a couple dollars here and there doesn't hold a candle to contributing to your company 401(k) plan and getting the employer match,” he said. “Don't get lulled into a false sense of security just because you are ‘saving.’”

Best apps for saving money

We took a look at dozens of money-saving apps, analyzed independent reviews and evaluated them based on cost, functionality, ease of use and customer satisfaction. Here are four that came out on top.

Qapital - Best for Beginning savers

Qapital is designed to make saving fun. You connect an authorized checking account, then set goals and rules.

For example, you may choose to set a goal for a vacation to the Bahamas. To achieve your goal, you may funnel a certain dollar amount into this account each week or perhaps set a “Guilty Pleasure Rule.” With this rule, when you spend money at a retailer where purchases are more of a luxury than a priority (think your nail salon, favorite coffee shop or takeout restaurant), a designated amount of money is deposited into your Goals account. Your Goals account is FDIC-insured, and you can withdraw from it as often as you like.

The company also offers the Qapital Visa® Debit Card, which is linked to your Spending account. Your Spending account is a checking account that’s separate from your Goals account, but it can be used to fund it.

You can use the app for free for 30 days, but after that, you’ll pay a monthly fee depending on which membership plan you choose. Basic is $3 a month, Complete is $6 a month and Master is $12 a month. (More on the membership plans here.)

App-store reviewers give it consistently high marks — 4.8 out of 5 stars on Apple’s App Store and 4.6 out of 5 stars on the Google Play Store. Many customers say it’s intuitive to use and does, in fact, make saving more fun.

Chime - Best for those who want to avoid fees

Chime is an online bank that offers customers several options, including a debit card, spending account and savings account. You can have a portion of your paycheck (10%) automatically sent to your savings account and round up purchases made with your debit card, with the extra going to your savings account.

You’re not going to earn a ton of interest on your savings (the APY is .01%), but the biggest perk of Chime is that there’s no required minimum balance and no fees — not even for overdrafts.

Users give the app high marks, with 4.6 out of 5 stars on the Google Play Store and 4.7 out of 5 stars in Apple’s App Store. While some report issues with customer service, many say it’s easy to use to save more money. Others cite the ability to receive direct deposits up to two days earlier.

Simple - Best for those trying to reach specific short-term financial goals

Simple offers online bank accounts that allow you to set savings goals with timelines, then it’ll help you plan to reach those goals. For example, if you want to save $1,000 for a vacation by next summer, it will help you hit this goal based on your income and spending habits.

Money in your goals account earns 2.02% APY. It also offers a Safe-to-Spend feature. Rather than a simple balance, which can be misleading, it factors in your goals, expenses and scheduled transfers. This way, you know how much you can safely spend without coming up short.

Simple is mostly fee-free, though you will be charged for ordering checks. You could also be charged for out-of-network ATM withdrawals, depending on the ATM owner.

Simple rates fairly well on both the Google Play Store (4.4 out of 5 stars) and Apple’s App Store (3.6 out of 5 stars). Many report how easy it makes savings, though some wish the app had more functionality, and others aren’t very happy about the removal of the bill-pay option.

Digit - Best for those who want an easy, automated savings option

Digit connects with one of your existing bank accounts. It analyzes your spending habits, advises how much you can save and then automatically moves that amount to your Digit account — as long as your bank account has the money to cover it.

You can withdraw money from your Digit account at any point, and there’s no requirement that you keep a minimum balance. Once you save for three months, you start earning a 1% savings bonus. Digit costs $2.99 a month after a 30-day free trial.

Users are enthusiastic about their experiences with Digit, giving it high app-store ratings in both the Apple and Google Play stores — 4.7 and 4.5 out of 5 stars, respectively. Customers say that even with the monthly fee, it still helps them save a significant amount of money and keep track of their spending.

Best apps for investing

While the above money-saving apps primarily fuel your savings into a savings account, others will send funds into investment accounts. They don’t require deep knowledge of the markets to use and let you invest relatively small amounts of money on a regular basis for potential bigger payoffs down the line.

Johnson, the finance professor, said the sooner people start investing in the stock market, the better.

“The surest way to build wealth over long-time horizons is to invest in a diversified portfolio of common stocks,” he said. “The longer you are in the market, the more you can benefit from compounding.”

Choosing an investing app from the sea of apps can be a bit overwhelming though. To help you narrow your search, we took at look at dozens of money-saving apps, analyzed independent reviews and evaluated them based on cost, functionality, ease of use and customer satisfaction. Here are four that rose to the top.

Acorns - Best for beginning investors

Acorns takes your “spare change” and invests it into a portfolio made up of stocks and bonds. Once that change adds up to $5, it’s automatically invested. So, depending on how much you spend, you could be investing daily, weekly or monthly. You can also make one-time investments anytime you like. Those small amounts over time can potentially add up to significant gains, and you won’t likely even miss your change.

Plans range from $1 a month for the Acorns Core plan to $3 a month for the Acorns Spend plan, which includes a checking account as well as options to save for retirement, such as individual retirement account (IRA) plans. (More on the plans here.)

Acorns has a loyal following of users, earning high marks in both Apple’s App Store (4.7 out of 5 stars) and the Google Play Store (4.4 out of 5 stars). While there are no guarantees when it comes to the stock market, most say they’ve seen significant gains in their savings and find the app easy to use. More serious investors may want more control and insight into their investments.

Stash - Best for those who want to invest small amounts

Stash lets users start investing with as little as $5, offering automated savings tools to help grow your portfolio. It offers a Stock-Back debit card that funds your portfolio with roundup “change” when you make purchases as well. It’s similar to a cashback program, but instead of getting cash back, you get stock back.

There are no trading fees, but plans range from $1 a month for its Beginner account with basic investment features to $9 a month for its Stash+ plan, which includes extras such as two investing accounts for children, a metal debit card with two times stock back and a monthly markets insight report.

Users rave about Stash. It scores high in both Apple’s App Store (4.7 out of 5 stars) and the Google Play Store (4.3 out of 5 stars), with users saying it makes investing as effortless as possible and helps educate them about it as well. Some note that transfers can be slow, but most say it works seamlessly and effectively.

Wealthfront - Best for those looking for more comprehensive automated financial planning and investment services

Wealthfront offers free financial planning. It will take a look at your income and spending habits, then provide advice and projections based on them.

After you answer some questions and link a U.S. bank account to your Wealthfront account, it will build an investment portfolio for you and automatically invest your funds. You pay a .25% annual advisory fee based on your account balance, and there’s a $500 account minimum.

Wealthfront also offers a high-yield savings account with a 2.57% APY, which may be a better option for short-term saving goals than the more volatile stock market.

Wealthfront scores high with users, earning 4.7 out of 5 stars on the Google Play Store and 4.9 out of 5 stars on Apple’s App Store.

Robinhood - Best for those who want to avoid commission fees

Robinhood allows you to set up an investment account and start making free trades within minutes. That means there are no commission fees and no account minimums. Robinhood also allows users in some states to invest in cryptocurrencies, such as bitcoin.

If you’re looking for extensive guidance and customer service, the basic service may not be enough. However, you can upgrade to Robinhood Gold, which provides addiitonal features including larger instant deposits, more market research and the ability to invest on margin, for $5 a month.

This app has a strong fan base, with high app-store ratings in both the Google Play Store (4.6 out of 5 stars) and Apple’s App Store (4.8 out of 5 stars). Users rave about how easy the app makes it to trade. They also love the lack of trading fees. They say it’s a great way to dip your tools into the world of investing.

Bottom line on money-savings apps

Money-saving apps can be a great way to get your savings ball rolling and help you consistently make savings a priority as effortlessly as possible.

While they shouldn’t be your only means of savings, they can be an effective tool as part of your overall personal financial plan.

Take a look at your goals and your personal finances to choose a money-saving app that’s best suited for your needs.