Posted on August 15, 2016 in Saving Money
How Real People Use Automatic Savings to (Finally) Get What They Want
When Matt Zwiebel bought his Nikon D60 camera ten years ago, he assumed he would upgrade his lens soon after. “I’ve always wanted a 35 millimeter lens,” says Zwiebel, “but it was never top of mind to set aside money for it.”
So when Zwiebel discovered Dobot’s new automatic savings app, he figured he’d test it out by saving for the $200 lens. He reached his goal within a couple of months. “It was completely painless—I checked my Dobot balance one day and all of a sudden, I had enough,” he says. And the best part? “I didn’t even notice the money leaving my checking account.”
Automatic savings isn’t a new idea—in fact, you might already use it to fund your 401(k) plan or other retirement account. But as Zwiebel’s experience shows, this strategy works great for all kinds of financial goals, whether they’re big, small, serious or fun. For example, here are the top five goals that Dobot users are saving for right now:
1. Travel (Disneyland, Spain, Costa Rica, New York)
2. House (down payment, kitchen upgrade, bathroom repair)
3. Car (new car, repairs)
4. Special events (birthdays, weddings, bar mitzvah, adoptions)
5. Debt (credit card, other)
The science behind automatic savings
There’s actually a psychological reason that automatic savings works so well. “For some activities, no matter how hard you try, it is very hard to exercise restraint,” says Utpal Dholakia, PhD in an article for Psychology Today. That’s because self-control is a limited resource—every time you use it, you have less willpower leftover for the next tough choice. Depleted self-control gets replenished eventually, but it can take a while. That’s why most people have more willpower in the morning than they do at night.
To combat willpower fatigue, Dholakia recommends “automating virtuous behavior,” or taking the difficult decision out of the equation. If you have to choose between transferring $100 to a savings account and spending it on a night out with friends, you might choose the latter because your self-control is temporarily on the fritz. If you automatically transfer $25 a week from your checking to savings account, you remove the risk of choosing instant gratification over long-term goals.
Rethinking the “savings” goal
If automatic savings is such a no-brainer, why don’t more people use it? For one thing, before apps like Dobot became available, the options were clunky, at best. Even after you jumped through hoops to set up an auto-transfer, you might’ve struggled with remembering to check your balance and adjust the transfer amount as your income went up or down.
With Dobot, you’re up and running (and saving) with just a few easy steps. Our algorithm analyzes your transactions, calculates a “safe savings amount”, then sets aside small amounts of money a few times a week to help you reach your goals. It’s never enough to overdraw your account, and your money is kept in a bank account, so it’s FDIC-insured and safe. You can check your balance and add or withdraw money whenever you want, right from your smartphone.
But one of the best parts about Dobot is that it’s designed to inspire you to save for anything. Anything. Instead of transferring $50 a month into a generic savings account, which you’ve earmarked in your head for about a hundred different things and nothing at all, Dobot is all about the specific financial goal. Which is not only a lot more effective, but also a lot more fun.
When you set up your Dobot account, the app encourages you to set at least one savings goal. After naming your goals and adding pictures for motivation, you can allocate savings to each goal as you please. For example, you might set one $1,200 goal for a plane ticket to Paris and another $400 goal for an iPad to read on the flight.
What have you always wanted to save for but never had the willpower—or rather, the right tools—to do it? Let us know in the comments—we’re always looking for savings inspiration!