Baby Steps: The Benefit of Micro Savings

A while ago, I read something that really struck me. It was about a comedian, W.C. Fields. He was a successful guy but he lived during the Great Depression and, it seems, was very concerned about saving a few bucks whenever he could. A sensible thing. And of course, one learned the hard way during the worst of economic times.

W.C. toured many cities and towns with his comedy act. And everywhere he went, he would open bank accounts to deposit his earnings, so that he always had some money handy no matter where he was. Of course, there was a problem after a while –  keeping track of where the cash was. It is said that when he died, there were a bunch of these accounts scattered around the country abandoned.

Well, that is what the Great Depression can do to you I suppose. You can never have enough cash stashed to feel a little secure.

If W.C. was alive today, he would surely love how easy it is to set up savings accounts and keep track of them – all from your phone!

I think I have that ‘insecurity’ gene that W.C. carried. I feel the constant need to put a few bucks away. For emergencies or unexpected needs.

So I have really embraced some of these financial services (banks, brokers, funds) that allow you to start with any amount (spare change really) to open an account, and then have regular deposits automatically pulled from your bank account – all before you see it or spend it.

I’m a firm believer it the ‘out of sight-out of mind’ approach to saving. So these services have allowed me to set up what I call little micro-accounts, all drawing little amounts out of my bank account, weekly and/or monthly. Its truly painless and I don’t even miss the money I’m saving because I set the amounts so low and it all happens automatically.

In short order, these accounts are now beginning to grow, which gives me further incentive to continue, or even increase these little savings programs.

The services I am using for this purpose are:

  •  Acorns. This service rounds-up to the next dollar all transaction activity in my bank account, and invests this spare change into a stock fund. So, for example, when I buy groceries and the charge is $34.75, Acorns with take $0.25 and move it into my little savings account with them. All they do is round up all my spending and save the difference for me automatically.
  •  Robinhood. This service allows me to buy stock with money I deposit in this account. No commissions too; except I suspect they take their cut from the price I pay for the stock. Anyway, I have been socking away a few dollars through an auto-deposit each week into this account, and buying stocks, even only 1 share, based on my own research, or impulse. I like this account because it allows me to but only a few shares so I can start to watch a stock before I really commit bigger amounts to it. And I must admit, I do occasional buy stocks on impulse, like LYFT after its IPO. Yikes! But at least the damage is contained.
  •  Marcus Bank (which is actually Goldman Sachs). This is a straight savings account which offers 2.15% (as of Aug. 1, 2019) interest on your savings. This is a better place to sock away my “safety net” money that leaving it in my regular bank with its 0.15% annual interest! So, again, I have set up a simply weekly automatic swept from my bank to this bank.

All three of these accounts were set up online and linked to my current bank account to pull out automatic investments and to draw back money should I need to. There are others, of course. These work for me for putting away money that might have been in a cookie jar in my kitchen. And, as I see the balances grow in these three accounts, it spurs me to add more and more savings to reach savings goals, which I continue to revise higher.

I think W.C. Fields would love this new way of saving.

 

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