Parting with your money can sometimes feel like pulling teeth. It can be thrilling to feel carefree and frivolous with your spending, but the hangover from that state is worse than how you’d feel after a night on the margaritas.
One trend that’s sweeping the financial tech world by storm is “round-ups.” It’s said to be a cure-all, especially for the younger generation struggling to put money aside. Depending on the different round-up service, the premise is that from every expense or purchase you make, the amount will be rounded up (to the dollar or the nearest $5 amount) and the difference will be diverted into your savings. There’s no need for willpower and no need for deliberation because roundups are automated. It’s saving without the heartache and hurt.
The beauty of this trend is that roundups aren’t just available for savings – they’re available for investing, for debt, for shopping and your super.
Here’s our round up of the roundups:
Raiz, formerly named Acorns, is a micro-investing app founded in 2016, led by CEO George Lucas (not the same one of Star Wars fame) available in Australia, Indonesia and Malaysia. Their website states you can “invest spare change automatically from everyday purchases into a diversified portfolio.”
Raiz only invests in exchange traded funds (ETFs) – which we explain in our article here – and each portfolio incorporates a different strategy and mix of ETFs. The Raiz app charges $2.50 per month for accounts holding under $10,000 and anywhere north of that amount carries a 0.275% charge.
This app is a hassle-free way for beginners to become familiar with the share market.
App store review rating: 4.6 out of 5 stars
If you’re the kind of die-hard shopper who always has a wish list of items that you’re dying to purchase, then Sippora is the app for you! Connected to a plethora of retailers like Lululemon, Sephora and Bing Lee, you can select the items you want to save for and Sippora will start rounding up your purchases towards these items. You can also choose whether you want the round-up amount to be to the nearest $1, $2 or $5.
Reviews of this app do report that it can be a little glitchy. Also, you can’t currently withdraw any money, it must be used toward purchases.
App store review rating: 3.7 out of 5 stars
To rid yourself of debt:
Wisr is Australia’s first app that allows you to connect and pay down your debts through round-ups. Wisr states that on average users pay off an extra $100 a month on credit card or mortgage debt. As another example, the Wisr website shows that if you spend $5.47 on transport per day with a round up of $0.53, that could add up to around $193.45 per year. You can also top up with extra contributions towards your debt, which at the end of each week could be a sizeable total.
Before any shopping round ups or savings round ups, this should probably be the app to consider if you have any high interest debt. Every little piece counts in chipping away at debt. Despite not being as “fun” as rounding up for spending, if you’re able to bring your debts down faster, the amount you’ll save in interest will make it worthwhile.
Users of the app say the technical support team is very responsive and a lot of people have found it a great way of managing debts.
App store review rating: 4.4 out of 5 stars
There are two bank-based round up services that seem to be the crowd favourites. The first is ‘Up’ – an online neo-bank backed by Bendigo Bank and partnered with Google, for their cloud computing. The features of this banking app are endlessly impressive with categorization for different savings segments, automated saving set ups, goal setting and tracking, as well as the beloved round ups.
As long as you make five transactions in a month, you’ll activate the 1.10% p.a* (*current interest rate at time of writing) across all your ‘savers’ accounts, calculated daily and attributed monthly. The Up Bank is all about habit-forming products so they’ve created a very user-friendly and adaptable app. Every account is able to use the round up service.
You can choose the amount you want your purchases to be rounded up to and you can even turn off the rounding up capability if required. Perusing the reviews on the App store, the devout following for the bank almost appears cult-like.
App store review rating: 4.9 out of 5 stars
For your mortgage:
The second highly popular product for round up services is the ING Everyday Roundup, which required an Orange Everyday account. Once you have an Everyday Orange account, you can turn on the Everyday round up functionality and direct the round up savings into whichever ING account you like – including towards your mortgage.
The ING website claims that turning on a round up to the nearest $5 could help you contribute $65 towards your savings or mortgage each month. “On a 30-year owner occupier Mortgage Simplifier home loan of $350,000, rounding up $64 each month over the full term could help pay down a mortgage up to 24 months sooner,” ING states. That could be a savings of $16,000 in interest off your loan.
So if you’re one of those ING loyals with ‘Splurge’ written on your card, definitely look at the option of switching on your round ups.
Account review rating: 3.7 out of 5 stars
Finally, for more sneaky contributions towards your superannuation – there’s SuperRewards. SuperRewards has more of the ‘shop-to-save’ model of business, partnered with a wide ranging library of dedicated retailers. Once you’re a member of SuperRewards, you can browse through their list of retailers and navigate to their website (from SuperRewards portal) before making purchases. Each retailer isn’t just giving you ‘cashback’ but they actually pay a percentage directly into your superannuation.
From Woolworths, Apple, Booktopia, Cotton On, Adore Beauty, Freedom, eBay and much more – the chances of you ordering a product from one of these retailers is very high.
When we spoke to the Pascale Helyar-Moray, founder of SuperRewards, on the Tilly Money podcast recently, she mentioned that they are working on developing a more seamless method for future purchases.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.