Apps to help you save money or invest can be a great way to kickstart better saving habits and help you build positive financial behaviours without much effort. For example, features like automatic roundups on purchases or savings pots can help to make a big difference.
This article explores the benefits of saving/investing and highlights 3 trustworthy apps that can help you save/invest money, but first let’s cover why saving/investing is so important and what the differences are.
Firstly, saving and investing are very important as they are key steps towards financial freedom. This means being able to achieve your financial goals and reducing financial worries. While financial freedom looks different for everyone, major milestones might include building an emergency fund, buying a house, or planning for retirement.
Learning how to save/invest and utilizing apps that can simplify this process will help you to adopt good habits and can play a huge role in reaching your financial goals.
What’s the difference between saving and investing?
Saving involves setting aside money regularly to fund future goals or prepare for emergencies. Savings accounts are very low risk and typically offer interest on your balance, helping your money to grow over time. Interest rates in the UK vary, with some accounts offering anywhere from 2% to 5% annual interest. The more you save, the more you benefit from compound interest—which is where your interest earns interest over time. Over time, this compounding effect can significantly boost your savings.
Investing, on the other hand, involves putting money into assets like company shares, funds, or government bonds with the aim of generating higher returns. Unlike savings accounts, investing carries more risk because the value of these assets (e.g. the company shares) can fluctuate.
However, the potential for returns is greater than with a savings account, especially over the long term. Rather than receiving a fixed interest rate, investors make money when the value of their investments increases. Although markets can be unpredictable in the short term, long-term investing can lead to significant growth.
While savings provide security, investing offers opportunities for growth. Using both strategies together can help you build a well-rounded financial plan.
More reading on saving vs investing:
Apps to help you save or invest
Since saving and investing are so important, it’s worth looking at apps that can make managing your money easier. Here are some reliable options, including their key features and some potential drawbacks.
Plum: Automated savings and investments
Plum is a free app that helps you save and invest effortlessly. It connects to your bank account via Open Banking and analyses your spending to determine how much you can afford to save. It then automatically transfers small amounts to a Plum savings account.
Plum also has a round-up feature, where it will use purchases made on the linked account and rounds them up to the nearest pound. For example, rounding up an 80p spend to £1 and automatically saving the 20p into a Plum account.
Key features:
- Easy to use application with easy to find information and automation features to help you save without thinking about it
- Automatic savings based on spending habits
- Round-up features, saving spare change from purchases
- Lots of automation rules; auto-saving and round-ups free of charge
- Tools to help you understand what you can and can’t do with your money
- Free for basic-tier investing in a general investment account
- Regulated by the Financial Conduct Authority (FCA) and covered by the Financial Services Compensation Scheme (FSCS)
Drawbacks:
- You need to sign up for a paid tier for access to some investment features, such as a Stocks & Shares ISA
Check it out: Plum
Monzo: Digital bank with budgeting tools
Monzo is a popular digital bank that offers a range of features to help users save money. It provides savings pots, round-ups, and budgeting tools to help you stay on track.
Key features:
- Customisable pots for separating savings from spending money, for example you can create a pot for ‘Holidays’, another for ‘Essential Bills’ etc.
- Round-up feature
- Spending categories: Transactions are automatically categorised (e.g. groceries, entertainment, bills) to help you understand your spending habits
- Budgets and limits, where you can set monthly spending limits for different categories to avoid overspending
- Salary sorter: Automatically divides your income into different pots for savings, bills, and spending as soon as you get paid.
- Competitive interest rates on savings
- No fees for setting up savings pots
- Instant access to savings
Drawbacks:
- Interest rates may not be as high as dedicated savings accounts
- Limited investment options
HyperJar: Budgeting and savings for young adults
HyperJar is a free app designed to help users plan their spending and savings more effectively. It’s particularly great young adults and families as it helps to encourage better money management habits.
Key features:
- Uses digital “jars” to organise savings for different goals
- Allows users to prepay into jars with certain retailers, offering cashback and discounts.
- Can be used to teach children about money management with linked accounts.
- No monthly fees, making it an accessible budgeting tool.
Drawbacks:
- HyperJar does not offer investment options or interest on savings, as it focusses purely on budgeting and goal-based saving
Check it out: HyperJar
Finding the right savings app for you
Choosing the right savings or investment app will depend on your financial goals, spending habits, and how much control you want over your money. Whether you like the automated nature of savings from Plum, a digital bank with budgeting features like Monzo, or a goal-focused budgeting app like HyperJar. This article has only highlighted 3 apps but there are so many more tools on the market to help make managing your money easier.
The key to building better financial habits is consistency, by using these money saving apps to automate savings, track spending, or start investing, you can take small steps to set you up for success with minimal effort.
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