If you missed the news last week, Wealthsimple announced that they’re adding a new feature, Roundup, to help you save more money. Basically, you link your regular cards to your Wealthsimple account, and they’ll round up every purchase to the nearest dollar and put the spare change into your chosen account—yes, including your investment accounts.
I think this is a super helpful option to have, but it’s not a new idea, nor one that you’d need to use via Wealthsimple. The same concept is used in apps like KOHO (which I use) and Mylo (which I haven’t tried yet), and I first used a roundup-type savings feature in university on a savings account via Scotiabank.
The good old days! (I recently went back to speak to a university class I took almost a decade ago. Rounding up your purchases to save more is not new, and neither am I as a human being.)
Since I’m basically an OG user of roundup-type features, and a current one at that, I wanted to share the three best use cases I’ve found for enabling this type of feature, no matter which platform you use to do it.
You genuinely don’t think you can save any more money
If you’re in a place where your monthly financial commitments feel like they’re basically equal to your income, and you can’t fathom finding any additional wiggle room to save money, these types of features can be a great first step to getting out of that mindset. Are you going to save hundreds a month using a roundup feature? Probably not. Will you save tens of dollars you didn’t expect to? Yes!
You want to save up for a medium-sized fun purchase
Let’s say you want to buy something purely fun or frivolous, but you want to do it responsibly—and it’s a bit outside of your monthly fun budget. Setting up a round-up feature to stash your spare change towards the goal of a purely fun purchase that would be nice, but isn’t a huge priority, is a great way to save up.
This is how I currently use my round-ups in KOHO. I’ve got a savings goal, and every time my round-up amount hits $10 or so, I cash it out and put it into my savings goal. It means I’ll save up the $50 to $100 I’m aiming for faster, without really having to think about it. Once I do, my insert-fun-purchase-here is fair game to buy anytime. (It’s how I bought a gold necklace earlier this year, saved up for my latest Lush order, and now I’m saving up for my annual planner.)
This works specifically because I’m not counting on the round-ups to fund my retirement, or putting pressure on them to hit a certain amount. That way, it’s never an incentive to make additional purchases “to get the round-up,” which is one relatively fair critique of these kinds of programs.
(It goes without saying that buying an additional $5.50 thing to save $0.50 isn’t ever going to be your best savings plan.)
Get extra cashback when you start using KOHO
I’ve been using and loving KOHO for over 6 months now, so I’m thrilled to have partnered with them on an awesome deal for you guys. Sign up to start using KOHO, enter the code HALFBANKED when it asks who referred you, and get a $20 cash bonus in your account when you make your first purchase within 30 days of registration.
You want to experiment and see if you notice the money being saved
Based on my current financial life, my RRSP makes more sense for the bulk of my retirement savings, so I’ve been largely letting my TFSA kind of hang out in Wealthsimple and do its thing, sans regular contributions. But with Wealthsimple’s new Roundup feature, I figured why not test it out and see how much really gets added to my TFSA every month by rounding up my everyday credit card purchases? (I mostly use credit for easy cashback and tracking, as opposed to debit. To each their own!)
So last night, in between games of Two Dots as I was zoning out in front of Quantico re-runs on Netflix, I popped open my Wealthsimple app and linked it to my Tangerine credit card. Does that sound easy? Because I really hope it does, it was super easy. I selected my TFSA as the recipient of my roundups, and my chequing account as the place for them to withdraw the money, and boom: I’m now experimenting with rounding up my spending to see how much it adds to my TFSA.
If it goes well, and I don’t notice the impact, maybe it’ll be time to add a regular contribution back into my life, but that’s the best part. I can test it out first, super easily, and see how it goes.
You don’t need to round up, but it can’t hurt
Here’s the thing I can say with total confidence about these types of features: If you’re on the fence about using them for pretty much any reason, you should just give it a shot, whether it’s on Wealthsimple, KOHO, Mylo, or your regular bank account.
In my experience, you’ll be pleasantly surprised at how little you miss the money, but unless you’re making tons of purchases, you may also end up a bit underwhelmed with how much accumulates—which is a good thing, and a great prompt to save more on your own if you can swing it!
If you’re sure you don’t want to use them, I’ve also got a solution for ya. For a similar effect, set up a $10 to $15 automatic savings contribution into a dedicated account every paycheque. In the same way that you wouldn’t miss the better part of a dollar every time you buy something, you’ll easily adjust to having $15 less per paycheque, and the money will build up at roughly the same rate if your roundup amount is to the nearest dollar (or if you don’t buy many things).
P.S. The Wealthsimple links are affiliate links, because I love and use their services, so we’ll get a small commission if you sign up at no cost to you! Plus, you’ll get a $50 bonus when you invest $500 if you sign up via my links.
I used Mylo for a time, but after incurring TWO NSF charges ($45 a pop), I informed them I would not be using their services anymore. I love the idea of rounding up my transactions and saving the difference but it appears this type of service is only for those that can keep a considerable cushion in their account at all times (and I am not one of those people).
That is a really great point Melody, and I’m so sorry to hear that happened! That’s one thing about KOHO in particular that works well for me—it’s all done on a prepaid VISA, so transactions just won’t go through if there’s not enough funds on the card. As far as I know you can’t overdraft it (but I’ve never run into this, so I may also be mistaken.) But you’re 100% right, if these kinds of features won’t fit into your life it’s easy to give them a pass!
No mention of Acorns? That’s the one I hear the most about here in the states, haven’t tried it myself but I’ve heard good things.
I’ve also heard good things about it from friends who live in the US! Sadly it’s only available in the States, and I’m Canadian, so all of these are Canadian options.
I have been using Mylo for about 6 weeks and have built up $40. It reminds me of the change jars that people used to have. The one thing I don’t like is they have a monthly fee.
I would love to change to the Wealthsimple version but currently they do not link with my bank. I will be looking into KOHO, I had never heard of it until today.
Oh it’s awesome! I use it to give myself my fun spending money every month on a separate card, so I know that if I can buy it on the card, it’s all good, and if I don’t have enough I have to wait till the next month. It’s SO helpful for keeping me on track with fun spending that way! (It’s basically a prepaid Visa with an awesome app, and the app lets you do all of the roundup stuff.) It wouldn’t round up as much as tracking *every* purchase if you use it the way I do, just for fun stuff, but I know some people use it for way more than that!
I love Mylo! They have features that you can increase the round-up or have a set amount taken out, as well. I just have it set to the default which is up to each dollar. So far I have saved over $300 towards a vacation without even noticing it since there’s always money in the chequing account to pay bills. I was lucky and was one of the first to sign up so they waived the monthly fee. I highly recommend it but I would also be interested in trying out KOHO, thanks for the information.
I have been using Mylo for about a year now and have reached a savings of just over $1000 and it really was painless. Since it works a little bit at a time there isn’t the shock of putting away $50 a month for example.