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Saving is the keystone to financial health. It’s the first step to many financial hopes and dreams and leads to greater security. Most of us would like to be saving more (it was the most common financial resolution in a Fidelity study), so why is it is so hard to save money?
It turns out saving is uniquely hard for our human brains, so we shouldn’t beat ourselves up when we fall short. Instead, it helps to understand why it’s so hard to save money in the first place and how financial apps like Oportun’s Set & Save help us avoid some of our natural shortcomings.
Here are the four problems we deal with around money and how to solve them:
Problem #1: Brain power
In other words, thinking is hard and takes effort. Financial analysis, like trying to understand compound interest or how much to invest, are difficult. We only have so many hours in the day to think about the issues we face—it makes sense if we’re not all passing our time figuring out the perfect amount to save or how much extra we can afford to pay on our credit card debt. We might do nothing instead because it’s easier to make the minimum credit card payment, even though that might be worse for us in the long run.
Solution: A smart financial assistant
Oportun’s Set & Save doesn’t have the same kinds of cognitive limitations in tackling tough problems. Set & Save has no problem crunching numbers, again and again, to account for even the smallest differences in your income and spending: a random bill, an extra shift at work, a friend finally paying back some cash you lent them. That way, Oportun will always be able to save the right amount of money, at the right times, without ever getting tired.
Problem #2: Self-control
Most of us want to save more, but it takes a lot of willpower (and effort) to continuously move money “out of sight.” Whenever saving becomes a choice, there’s a chance we’ll make the choice to use our money in others ways rather than stash it away.
Solution: Effortless willpower
Oportun members really only need to make one good choice by signing up for Set & Save. All the other financial health steps are willpower free. And by keeping your cash savings in a separate FDIC-insured account, Oportun sets your default to making positive financial choices. More discipline with less work.
Problem #3: Procrastination
This tendency probably won’t be news to anyone who’s pulled an all-nighter on a school project, but as humans, we generally put things off and avoid unpleasant tasks. That sometimes makes sense—there probably are times when putting off a task long enough ultimately means we never have to do it!
Unfortunately, if we’re talking about personal finance, procrastinating doesn’t do us any favors. It might feel like we have all the time to start a savings account or think about retirement. It might feel uncomfortable to budget how much we can save in a month. So we might avoid doing it altogether, when the truth is, the earlier we start, the more savings we can accumulate.
Oportun saves automatically. Instead of a monthly process of figuring out how much you can save (definitely procrastination-worthy), Set & Save gets your approval to save in a smart way and moves money to a savings account without you having to do anything. It’s especially smart because Oportun’s using that resistance-to-boring-things for your own benefit. Choose your settings and savings goals, and let it go. And Set & Save’s responsive savings means that even if you’re trying to save money on a tight budget, Oportun can still help.
Even better, Oportun takes just a few minutes to sign up for, so there’s no reason at all to put it off.
Problem #4: Impact to daily budget
Savings can feel like a drop in disposable income. It can feel like a loss in your day to day finances. Since this budget pinch feels bad, we tend not to aggressively save more, even though a rainy day fund or stash of cash can be good for our future selves.
Solution: Save here and there
Set & Save constantly adjusts how much and when to pull your money into your savings account based on daily changes to your income and expenses. By automatically scaling savings up when you get a raise, or down when you have a big expense to cover, we help you avoid the “status quo bias” so you can save more when you can afford it, without having to think about it.
Saving isn’t something that humans are wired to do well, which is why Oportun can be so helpful. Set & Save is wired to save in all the ways people aren’t. That’s why no matter your money situation, Set & Save is a perfect companion for your wallet. Want to see how easy Oportun can make it for you to save money? Sign up now and see how much you can save in our 30 day free trial. $5 per month after trial, cancel anytime.