How Digital Nudging Can Help You Save Money

Digital nudging means using apps, emails, push notifications, text messages, and other reminders to encourage certain decisions or to develop different behaviors. The concept is based on the work of the American economist and Nobel Prize Winner Richard Thaler, who said, “If you want people to do something, make it easy.”¹

When making decisions in digital environments, nudging uses design elements to help guide your behaviour. The idea is that small changes to your environment can have big influences on your behavior.

Even if you’ve never heard the term, you’ve likely experienced a digital nudge.

For instance, if you’ve ever sent an email and forgotten to include an attachment you may receive a reminder that says something like, “Did you want to include an attachment?” This is a digital nudge — a small encouragement to take an action that leads to a desirable outcome.

Now let’s talk about the important stuff. How can digital nudges help you save money?

Set digital reminders

Using a financial app, a digital calendar, or an alarm on your phone, you can send yourself a digital reminder to save, invest, or pay off debt.

This might sound too easy, but research shows that simply receiving a reminder can shift your attention and nudge you toward your desired goal.²

If you want to make these reminders even more effective, schedule them for a time when you’re not overloaded with work or other stressors. Instead of scheduling reminders on a Monday morning, set it for a Thursday evening when you know you have nothing to do and can focus on your money goal.

Access real-time financial feedback

Apps with financial dashboards that let you see how much of your income goes towards non-essentials versus bills can nudge you to make better choices. It’s not just the ability to visualize the information on a dashboard – it’s also about when you see it.

Unlike a desktop or laptop, your smartphone allows you to see your finances in real time. As you’re standing in line about to buy something you don’t need, you can check your financial app which can prompt you to rethink if you really want to make the purchase.

Sign up for Round-Ups

Many financial apps offer you the option to sign up for features like Round Ups.

Round Ups represent the modern equivalent of a spare change jar. In the old(er) days, when people still carried cash, they might put their spare change in a jar. Once the jar was full, the money could be used to achieve a financial goal or put into a savings account.

Round-Ups use a similar concept. Every time you make a purchase (say you buy a coffee for $5.50), you can choose to round up to the nearest dollar ($6). The extra money ($0.50) is automatically deposited into a savings or investment account. It’s that easy.

If you have a Chime account and enable the Round Ups feature, every time you use your Chime Visa® Debit Card or Chime Credit Builder Secured Visa® Credit Card to make a purchase, we round up the transaction amount to the nearest dollar.

Use an auto-savings app or feature

You’ve probably heard the advice to “pay yourself first.” This is when a portion of your paycheck is directly deposited into your savings account before you have a chance to spend it.

Today, auto-saving apps and features make auto-saving easier than ever. Even freelancers and those who don’t bring home a consistent bi-weekly paycheck can take advantage of auto-saving.

At Chime, members can enable the Save When I Get Paid feature to automatically deposit 10% of eligible direct deposits into savings when they get paid.³

If you’re living paycheck to paycheck, saving for the future can feel like an impossible task. But taking small steps like using financial apps to automate your savings and setting reminders to nudge yourself in the right direction can help you progress toward your long-term goals.