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Microsave 101: How microsaving with spare change can build your savings

What we'll cover

  • What microsaving is

  • How microsaving works

  • What the benefits of microsaving are

Sometimes saving money can feel like training for a marathon. That 26.2-mile race may seem daunting, but the truth is, you have to start somewhere. Which is why you never log a long run on your first training day, but each day, you run a little farther. Similarly, you could achieve sizable savings wins when you microsave over time.

When you microsave, you regularly make small deposits, which gets you in the habit of saving money. Once you get in the routine of putting some money aside, you’re more likely to stick with it in the long-term, creating financial opportunity.

Here’s how to get started.

What is microsaving?

Microsaving is a simple financial strategy that encourages people to save for the future.

Anyone  (of any age)  can microsave. Its name pretty much sums up what microsaving is: saving micro amounts of money. And when we say small, we mean it. When you microsave, the deposits you make into your savings account are typically less than a dollar. So, you may have one deposit that’s just three cents, while another is 75 cents, for example. You could make slightly larger deposits (think: $2), but the key to success is to keep your individual savings amounts small.

How frequently you make these small deposits is up to you and depends on the technique you use to microsave (more on this later).

How does microsaving work?

Whether you’re looking to start an emergency fund , save money for a vacation, or build a college savings fund, microsaving can be a practical way to build wealth. That’s because it can feel like it’s next to impossible to set aside large amounts of cash on a consistent basis (think: $500, $150, or even $50), while you’re paying off debt or just starting your career, for example.

But saving a nickel, or a dime, or maybe even 50 cents? That feels much more doable.

Now you may be thinking to yourself, “Each microsaving amount is so tiny. How am I ever going to reach my savings goals with this technique?” Here’s the thing: Over time, all of the small savings really add up to serious funds in your bank account. When you put your savings in an  Online Savings Account  that earns a competitive interest rate that compounds daily, your money will perform even smarter for you. And with no minimum balance or monthly maintenance fees, every penny of your savings will go towards your financial goals.

Why should you consider microsaving?

Technology makes it easy to microsave — no piggy bank required. Several microsaving apps exist that transfer funds from your checking account into a savings or investment account. Some charge monthly maintenance fees (which can quickly eat up your hard-earned savings) and not all are FDIC-insured, meaning there is a risk you could lose your money.

You can also microsave using your existing bank account. When you have an Online Savings Account with us, we can track your checking account for transactions to find areas where you could be saving more — and automatically move that safe-to-transfer money for you.

With our  Surprise Savings booster , all you need to do is link your checking account (it doesn’t even have to be with Ally) and activate the booster. We will analyze your linked checking account to identify small savings wins and automatically — and securely — transfer the funds to your savings account, where it’s FDIC-insured (up to the federal limit). Rest assured that with our Surprise Savings booster, we’ll only make transfers in amounts under $100 and no more than three times a week. But if you’d prefer to microsave a customized amount of money on a regular basis (like a couple of dollars, for instance), consider setting up automatic transfers.

And if an analog savings method is more right for you, consider one of these microsaving methods:

  • Paying with cash? Put your spare change in a physical savings jar, and once it’s full, deposit into savings.

  • When using coupons or participating in a discount shopper program, take note of your savings and transfer that amount into your savings after making a purchase.

  • Review your checking account and/or credit card statement at the end of the month. Round up each purchase to the next dollar and calculate the total. Subtract your statement total from that amount and transfer that sum into your savings.

What are the benefits of microsaving?

Putting a saving habit in place  or finding one that works for your financial situation can take some time — especially if you’re just starting out. (It can also be tricky when interest rates are changing.) Microsaving is a small act that’s, in a sense, a way to trick yourself into saving.

That’s because microsaving allows you to set aside money without setting a strict  budget . With microsaving, you save some spare change here and a tad of money there. You don’t have to make significant changes to your spending habits (like some other savings strategies require), but still have the ability to accumulate meaningful savings. Talk about a win-win.

With time, you’ll see your savings start to accrue, and you’ll begin to develop a money-savings mindset. That can motivate you to save even more (and in larger amounts) as your income grows.

It can be intimidating to train for a marathon, but the feat itself is rewarding. Same goes with saving money. Microsaving strategies are the training shoes to get you started — and once you do, your savings will give you the opportunity to go the distance.

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