Not many of us are fortunate enough to have enough money at the end of the month in order to put that towards savings. Many of us could, through budgeting and cutting back, commit and create our own sweep accounts. A sweep account simply is when a financial institution takes your excess money and deposits it into a savings account of your choosing.
There are a variety of apps which will do this for you including Acorn, Digit, and Chime. With these apps, your purchases are rounded up and the deposited into an account. With these accounts, the more you spend the more you save. I am not personally a fan of this concept because the more I use my debit card and/or credit card, the more I spend and I lose track of what is coming out of my account. For example, at one point in time in my life, I was spending $2,000 per month on my credit card though I had that $2,000 somewhere else. And what happened also is that I flew through that $2,000, charging things I had no business charging and then not being able to pay the amount in full because I was also spending my cash. These type of apps don’t work for someone like me.
I’d rather create my own sweep account. My version would be that on the last day of the month, or my last pay after all my bills and expenses have been paid, to take that excess balance and “sweep” it into my savings account. The benefit of this system would be it would force me to spend less so that I could have more to go into my savings account.
Anyone struggling with finances may want to 1. set up a budget, 2. decrease spending, and 3. transfer any money left over at the end of the month into a separate savings account (sweep account). Create your own sweep account.