Whether you’re trying to get a jump on next year’s taxes or taking stock of the first quarter to plan for the rest of 2019, you’ll have noticed one thing as you look at the bank and credit card statements: Budgeting and saving money is difficult. Even with the best willpower in the world, it’s hard to put something aside when you have bills to pay and unexpected expenses that arise, which is why you probably have automated payments set up to feed your 401K and retirement accounts.
But what about the rest of your money – the bits of spare cash here and there which you want to put into short-term savings? The amount you can put away varies each month, which makes it hard to automate it with your regular accounts: that’s where savings apps come in.
The better savings apps allow you to automate the saving of small (or even large) amounts of money, based on flexible rules that you can set up, so you’re always saving something, based on what you can afford each month. The idea is not to replace your existing retirement accounts – instead, you’re trying to maximize your other options for stashing money away. There are a few such apps on the market, but one of the more interesting ones is Qapital©.
What is Qapital?
Qapital launched in 2015 as a savings app, and it has recently broadened its scope to cover investing, too. The savings part of the app (Qapital Saving) is highly customizable and enables users to put money into a dedicated savings account automatically, based on criteria which they determine. Additionally, the new, investment part of the app (Qapital Invest) allows people to invest in different investment vehicles, depending on an individual’s tolerance for risk. It’s important to remember that investing involves risk, including the potential loss of principal.
How does Qapital make saving less hard?
In a word: Automation. Users set up “rules” within Qapital to help them save for specific goals (vacations, house payments). The rules then transfer the users’ money to their savings or investment accounts based on all kinds of principles, perhaps saving a percentage of their salary each month, or using if-this-then-that functionality, such as a rule that puts money into a “new car” fund every time you take a cab. More complex rules are also possible: for example, you could encourage yourself to spend less money on lattes by getting Qapital to track the amount you spend on coffee each month, and channel money onto your savings account as you decrease your coffee expenditure. Once you’ve set up rules that tell the app how you want to save or invest, it all happens automatically, so before you know it you’re building savings.
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How Qapital works
Qapital links to your regular bank accounts and moves money between them, your Qapital savings and investment accounts automatically once you’ve set it up (you can change your “rules” as much as you want). The app uses SSL encryption and funds are FDIC-insured, so it’s similar to online banking in terms of security.
In addition to the saving and investment functions, Qapital also has “Payday Divvy,” which divides up your paycheck for you (setting aside one part for taxes, for example, and another for household bills), and a spending tracker which will help you balance your budget – think of it as a health tracker for your wallet.
There are three levels of service.
- $3 per month allows you to use Qapital’s saving, investing, spending-tracker and budgeting features.
- $6 a month increases the level of analysis and sophistication that the app can provide you.
- $12 a month adds advice on financial wellbeing.
The app also offers a free 30-day trial.
Other micro-investment apps include Robinhood©, Stash©, and Acorns©. Some of these, like Robinhood, involve a very hands-on approach to the stock market, whereas Qapital functions more like a mutual fund, in which you don’t pick the exact stock your money is invested in rather, you invest in a basket of stocks based on your risk tolerance, and you allow the experts to manage it for you. In terms of savings apps (which is what Qapital is best known as), other options include Chime©, which is an alternative online bank with a savings component, but the main one is Digit©, – it’s a simpler, less customizable tool than Qapital, and as such it provides a different approach to saving. If all you want is to save a portion of your paycheck each month, Digit may be adequate for you. If you have more detailed goals, the customizable nature of Qapital will probably suit you better.
Why use a savings app?
If you’re trying to save for retirement, an app is unlikely to be the best way to achieve your goals, but if you want to find ways to top up your savings and really make the most of your income, a savings app can be an impactful tool. Most of us are conscious that we’re wasting at least some money every month (has every one of your Uber© rides and take-out meals from the last month been truly essential?), but it’s hard to know what to do about it, especially when we have other financial concerns. An app like Qapital allows you to make a plan to make the most of those little bits of cash you could use better, and then forget about it. Properly used, the app effectively does the kinds of small but useful money movements you’d likely make for yourself.
Also – and this is important – savings apps are fun. In order to save money, you have to deny yourself things, and nobody likes doing that: saving money is like going on a diet, but there are no compliments or longing glances thrown your way at the end of the process. An app like Qapital, which allows you to create all kinds of rules, ranging from the sensible to the downright quirky, effectively gamifies the process of saving money: since you’re playing yourself, you’re bound to win something.
Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner.
Qapital is a copyright of Qapital, Inc.
Robinhood is a copyright of Robinhood Financial LLC.
Stash is a copyright of Stash Financial, Inc.
Acorns is a copyright of Acorns Advisers, LLC.
Chime is a copyright of The Bancorp Bank.
Digit is a copyright of Hello Digit, Inc.
Uber is a copyright of Uber Technologies Inc.
Opinions expressed by the author are their own. Haven Life Insurance Agency offers this as educational information only. Haven Life does not endorse or offer the companies, products, services and/or strategies discussed here.
Haven Life Insurance Agency (Haven Life) does not provide tax, legal or investment advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction.