Impulse shopping can have disastrous effects on your budget. A person may try to save money toward some long-term goal only to be tempted by another purchase. Most often, the desire to purchase something is fleeting but powerful. Once you buy the item, the excitement generally wears off and you are left with less money and no long-term rewards.
In an ideal world, people would learn to curb these temptations on their own. They would learn to stick to a budget and deprive themselves of short-term rewards in order to achieve long-term goals. Unfortunately, many people do not have that amount of self-control, and the attraction of instant gratification is too powerful.
ImpulseSave: Instant Gratification for Saving
In order to address these people, ImpulseSave was created. While the service has been enjoying a closed beta test in Massachusetts, it's now publicly available. Essentially, the service is like a digital piggy bank that rewards users for saving money.
The user signs up and opens a savings account with ImpulseSave's partner, Leader Bank. Members decide on a few long-term savings goals, like a family vacation or paying off debt. They then arrange to transfer money automatically into the savings account each month.
Whenever a member is tempted by an impulse buy, he or she can simply text ImpulseSave or use the new app. This will trigger an automatic transfer to the savings account, essentially replacing an impulse buy with a similar-sized deposit into the savings account. The member is then congratulated on making the right choice and shown how much closer he or she is to the ultimate savings goal.
Because the money is in an isolated savings account and kept separate from the rest of a user's cash, members are less likely to dip into their savings. There is an option to transfer money from savings back to the user's checking account for emergencies, but it is not easily accessible, as it would be if both accounts were through the same bank.
There is also a social option where users can share their saving activity online through social networks. Although this feature is optional, it does help provide some accountability and additional pressure to save.
Pros of ImpulseSave:
- Money is deposited into an FDIC-insured savings account
- The money can earn interest as you save it
- You're able to instantly transfer money and prevent impulse buys
- The program rewards you for making a wise choice and keeps you informed about your progress toward savings goals
Cons of ImpulseSave:
- You must use Leader Bank; you cannot use another savings account
- You have to commit to using the program for it to be useful
- The program cannot compensate for a user's lack of motivation or self-control
Will it Work?
Of course, like all savings tools, ImpulseSave will only work if the user wants it to. A person must still have the self-control to choose to save rather than spending money on other purchases. For users that need only some encouragement to stay on-task for their savings, this program may provide the much-needed short-term rewards for saving.
Although the app is clever and the program can help make saving fun, ImpulseSave offers nothing that people cannot do on their own. You can establish a savings account with a separate bank from your checking, set up automatic deposits and utilize your bank's mobile apps to transfer money from one account to the other.
Ultimately, the only benefit that ImpulseSave provides is approbation for saving. While some people will benefit from this encouragement, it's certainly not a necessary feature for most people.
Jessica Bosari is a freelance writer and blogger for various publications and her own telecommute writing jobs blog. You can read more of Jessica's work here. If you have any comments or questions about SavingTools.com or about saving money, leave your comments in the form below or email firstname.lastname@example.org. Thanks!