Checksies ✅

Money things to read, money things to do.

31 January 2019


Hi, this is Checksies, a newsletter about how to do money. It's written by @annagoss and @rod, who are not financial advisors.

We sent three issues of Checksies last year. This year, we aim to do better and send more. Some will be quick link roundups rather than long essays (this one is a long essay). Feedback welcome. If you’re enjoying Checksies, please do tell your friends to sign up here.

Automating your savings

Automating your savings is often talked about as a way to prioritise paying yourself first, before you hand it over to a business that’s desperate to take money out of your pocket. (Once it’s gone, it’s gone: you aren’t ever earning that particular £5 again. That’s not a reason to not spend it, but it’s a reason to think about it before giving it to someone else.)
There are two ways to automate your savings:
  1. Set up a direct debit or standing order to a savings or investment account. That means a fixed amount leaves your account and into a harder-to-access account also in your name - preferably just after you get paid every month.
  2. Using one of the many automatic savings products that have entered the market in recent years; these don’t work off a fixed amount, but take money out of your current account throughout the month as you spend.
This email is about category 2.

Why automating your savings is quite easy and probably quite good for you

Spending the money in your current account is a bit like finishing off the chocolate buttons: exceptionally easy to do when they’re sitting there, looking at you. So apps that slowly take money off you throughout the month are a great way of saving what you didn’t know what you had. Or saving the chocolate buttons you didn’t really want but would’ve eaten anyway, so you can eat them later when you actually want them (the chocolate button analogy ends here).
In terms of results: these things definitely work. We haven’t used all of these products, but as an example: Rod saved several hundred pounds with Chip last year. Anna’s done £196 with Monzo’s Coin Jar since last March, and nearly £300 with Chip since October 2018. We know someone who has saved nearly £1800 with Chip in a year. Your mileage may vary, but we’re both finding money we could’ve frittered away manages to pay for bigger things like holidays.
Here’s a roundup of products you could use to adopt this kind of saving in your life. 
Some conditionals before you go on:
  1. We haven’t used all of them. Sorry.
  2. Automating savings throughout the month doesn’t replace category #1, above: we’d still advocate for setting up a lump sum transfer to a savings account for just after you get paid. But it helps stash up smaller amounts you didn’t realise you had. And over time, smaller amounts turn into bigger amounts!
  3. Security: Mostly, these products work using a standard called Open Banking. That’s a way that different financial institutions can connect up different products together. So you can see your Halifax balance in your Barclays app. Or use Transferwise for sending foreign currency directly inside the Monzo app. Before Open Banking, to do this kind of thing you’d need to share your login details for your online banking with the third party app. Open Banking is safer than doing that.
  4. Is your money protected if a company goes bust? Most of the below are registered with the Financial Services Compensation Scheme (FSCS), which means you’re protected on balances of up to £85,000. Some aren’t, but suggest that they cover you in other ways (Chip is actually putting money in a Barclays account; Cleo offers to protect you up to £85k if anything goes wrong). We’d advise you to do your own research into this if you’re worried.

Incremental savings

Incremental savings is what we call products that round up to the pound money you spend. So if your coffee costs £2.70 your bank will round up the amount it takes from your account to £3, paying the £2.70 to the coffee shop and sticking that extra 30p into your savings account.
Monzo Coin Jar
Coin Jar is a feature baked into Monzo, one of the UK’s ‘challenger banks’. So you can use it easily if you have a Monzo account. Open a pot via the Account tab, name it Coin Jar, and Monzo will move the round-pound sum into the Coin Jar automatically. You can just leave it running and not worry about it. And it’s easy to withdraw to your Monzo account if your main balance is looking a bit tight.
Interest paid to you: None.
Fees paid by you: None.
Who should use it: existing Monzo users. It’s probably not enough to switch for.
Here’s a link: Join Monzo
Is that link a referral code?: Yes it is. You, and Anna, both get £5 if you open a Monzo account through that link. (But only open an account if you actually want a Monzo account, because if it’s referral cash you’re chasing, you can get £100-150 to switch current account from some of the high street banks)
Starling is another of the challenger banks. It’s got a few more open banking integrations than Monzo (so you could switch mortgage inside the app using mortgage startup Habito, for example), but otherwise they’requite similar, we think. And like Monzo, you can round up on transactions. It looks like you can also multiply those round up sums, which could get you to a saving goal quicker:

Interest paid to you: 0.5% on balances up to £2,000, 0.25% after that.
Fees paid by you: None.
Who should use it: Existing Starling users, and those who want to power up their round-pound incremental savings
Here’s a link: Starling
Is that link a referral code?: No, it’s not.
Moneybox do the same thing as Monzo’s Coin Jar, and round up your transactions to a quid. The difference: that money goes into an investment account rather than a savings account. That means your money enters the stock market and could rise or fall depending on what the market does. You can choose between Cautious, Balanced and Adventurous funds, and you can put it into a Stocks & Shares ISA if you want to (you can only put money into one ISA of each kind each year, so don’t do that if you already have an S&S ISA for 2018-19 tax year!).
Interest paid to you: Depends on what the market does.
Fees paid by you: £1 per month, 0.45% platform charge (goes straight to Moneybox), 0.12-0.30% fund management charge (depends which fund you use).
Who should use it: If you’re looking for a low barrier to entry to start investing, Moneybox is one way in. But the fees are relatively high for investing. Experimenting might be more important to you than fees, so it’s worth a shot if you’re curious.
Here’s a link: Moneybox.
Is that link a referral code?: No.


Stash savings

Stash savings is what we’re calling apps that use an algorithm to see how fast or slowly you’re spending compared to your average month. Then if their algorithm reckons you can afford to stash away a bit, they calculate how much, and take it from your current account.
Chip takes what it reckons you can afford during a month - normally it saves something every 3-5 days. You can set a high, medium or low level of savings, and cancel a save if you think it’s a bit much. They have an overdraft promise, too: if Chip makes an automatic transaction that causes you to go into your overdraft, they’ll put £10 in your account to cover any charges
Interest paid: Starts with 0%; you get a bonus 1% (up to 5%) for 12 months for every friend you refer
Fees: None.
Who should use it: Chip is probably the most straightforward of the stash apps. You can set it to save quite aggressively, so it’s good for people trying to save automatically. They’ve had some trouble with shipping an updated version of the app, so if you’re unforgiving with bugs, best to avoid (nb we don’t think any of those bugs have been related to your actual money; that’s still safe).
Here’s a link: Chip
Is that link a referral code?: No. But if you do want an extra 1% interest, you can sign up with Rod’s referral code (mention it while you’re setting up your account in the app): ATVZPK
Extra disclosure: Both Anna and Rod put money into Chip’s crowdfunding raise on Crowdcube.
Plum attaches to your bank account, and links to your Facebook Messenger account. There isn’t a standalone app - just Messenger. It autosaves money for you, like Chip. It can put money into savings or into investments (the investments are “funds”, based either on your risk appetite (cautious, balanced, growth) or in your sector of interest (tech, ethical, emerging markets)). And it also offers ‘insights’ - bits of information that help you to track your spending, or lower your bills by switching supplier.
Interest paid: None, if you’re saving cash. If you’re investing, it depends what the market does.
Fees: Nothing if you’re just saving cash. £1 per month, 0.15% platform charge (goes straight to Plum), 0.22-0.90% fund management charge (depends which fund you opt for).
Who should use it: If you’re a regular Facebook Messenger user, Plum’s mix of savings, investments and insights looks pretty powerful. And if you were tempted by Moneybox, but the fees seemed too high or the amounts too small, Plum’s fees are lower than Moneybox and you’ll probably save more if you’re not just rounding up. There’s more choice on the funds, too.
Here’s a link: Plum
Is that link a referral code?: No, it isn’t.
Cleo is pitched as a personal assistant for your money. As well as stashing money away during the month, you can interact with it about all aspects of your spend - like asking how much you’ve spent on taxis in the past month. We reckon it’s fair to say it’s pretty squarely targeted at millennials and Gen Z - like Plum, it runs entirely through Facebook Messenger. It’s launched in the US as well as in the UK. Cleo will ping you on FB Messenger a fair bit, though you can “Shhh” it. Here’s a thing we think is a bit misleading, though: their founder is anonymously quoted on their homepage under a BBC logo, because he spoke to the BBC for an article. Hmmmm.
Interest paid: None.
Fees: None.
Who should use it: People who don’t mind bots who do emotional labour being gendered as women. Or if you want to connect multiple accounts to your auto-saver: Cleo is the only product on this list that allows you to do that.
Here’s a link: Cleo
Is that link a referral code?: No, it isn’t.
If there’s an incremental or stash savings app you think we should look at, let us know. And if you start using one of these and save loads of money, let us know. We like hearing about decisions people make after reading one of these.

Thanks for reading.

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Small print

We’re not independent financial advisors, so this isn’t financial or investment advice. Before spending money on financial products, you should talk to an Independent Financial Advisor. The ones you want are qualified as “Chartered Financial Planners”, and you can find one here. We’re in the UK, which means we don’t understand anything about advice, money or tax in other countries. We have biases. We hold shares in whatever Vanguard thinks is appropriate. We may also hold shares in individual companies, for instance our employers. We’re trying to work out what’s best to do, just like you are. Look after each other everyone.

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