Small Wins Equal Big Change

So if you remember, a couple of weeks ago, I posted about how much I love the service Betterment. Last week I decided to activate my Acorns account. It is still early to compare the two, but I am impressed by both of them. Mainly it is because once I set it up, I basically didn’t have to do anything other than sit back and relax.

The concept being used here is similar to Shawn Achor’s 20 Second principle from the Happiness Advantage. In this principle, you are setting things up in advance that will help to make good habits easier. The idea is that if you have to exert more than 20 seconds of energy to do something, you won’t do it. So make it easier on yourself to get started by using automation. In my above example, I have automated building a nest egg through the two micro investing services. Both invest my funds for me and rebalance when needed. I have Betterment set up to deposit every payday. My acorns account monitors my credit cards and bank account to deposit the rounded up change from all my transactions and invest every $5 it collects. This past week, it deposited over $12 from the rounded up change on my purchases. By not having to think about it, I am able to build a good savings habit to help protect my finances for those rainy days.

Another way to save money is using grocery lists when shopping. This is another way that I automate things to make it easier. I have an Amazon Alexa Dot right in my kitchen. When we are either out of something or running low, I just tell Alexa to add it to the grocery list. Then when I am in the store, I just pull up my list. This helps to curb the impulse buy instinct when you can’t remember what you need from the store. I keep saying that I wish I had an Alexa for my car so I could add things while driving, and I just found out that my husband’s car has Alexa built into it…hmmm…the possibilities.

The 20 second principle can also be applied to your time management. I plan out my work outfits the night before by using Alexa to check the weather for the next day. Then I pull the items I plan on wearing and hang them on my mirror. This way I am not rushing in the morning to find something to wear. In the morning, I set a timer on Alexa so I know when I need to start hustling with my hair or makeup. This gives me time to make my lunch and my coffee…again, ways to save some cash.

So what can you do to help build happy healthy habits to keep you on track? Have you used the 20 second principle?

Investing with Betterment

I will start off by saying that this is not a sponsored post. I am a user of this service and like it so much, I thought I would tell you all about it.

Back in June, our family experienced some setbacks with my husband spending some time in and out of the hospital. This was not something new as he had been experiencing health problems for a long time, but could never really get some answers. This time was different because it was so severe. He started seeing specialists and finally got answers and we are working on this being our new reality, but one of the side effects of his health issues is that he experiences a lot of ” brain fog”. One of the shockers was to discover that he thought he had paid bills in June only to discover that for whatever reason, ever single one of our household bills with the exception of the rent had not been paid. So I ended up taking over the bills.

One of the things that had interested me for a while was micro-investing. However, we always held off with the thought of “let’s pay off the credit cards first.” Which meant it never happened. So one of the things I set up when I took over the bills was to research the different micro-investing services. I liked what people were saying about the service Betterment. So I thought I would try it out and see how it worked.

I started off with one account and $20. Within a matter of weeks, I had already gained more in my account than my son’s savings account had earned in three years with 10x that deposited. This looked like a good sign. So I deposited $50 and things were still looking good. So I set up a joint account with my husband that would have $20 automatically taken out every payday. I figured this was a good place to start because $20 is not large enough that we would drastically miss it. My plan was that as I rebuilt our finances and got everything back on track, I would adjust the deposits to be higher. Last week, I adjusted my account to start taking $50 out of each paycheck. I am projected to have over $1200 in my account at the end of the year and almost $90k in 30 years. Which is a nice emergency fund or even holiday money. Though my plan is not to touch it for a couple of years to start building up a nice nest egg.

Since I started investing back in September, I have deposited over $300 and made about $7. While this may not seem like a lot, it is more than I would have earned from depositing the same money in the bank and it is not money I am really missing since I have been taking a little out at a time. What is nice about using the Betterment service is that I can cancel deposits before they are made, withdrawal money when needed, and they will automatically adjust my investments if it seems like they are no longer working for me.

Now there is risk involved with investing. The market could have some bad days which means your investment could drop. I have had that happen, but it did not reach the point where it touched any of my initial deposits. So it did not make me nervous. Then about two weeks ago, the market started drastically dropping. It started dropping to the point that I lost all my gained interest and it started to dip into the investment deposits. That made me really nervous and I was considering cancelling my upcoming deposit until things got better. My husband actually encouraged me to hold steady and I am happy to say that things are already bouncing back. In a span of three days last week, we made back about $5 in what had been lost. So if you plan to use one of these services, be patient and hold steady.

What is also nice about Betterment is that it is based on goals. You set what your goal is for investing (like a nest egg, paying off college, house, etc); you set the risk you want to take on your investments; and you set the amount you want your goal to be and in what timeframe. The service will tell you recommendations based on the info you provide. For example, if you want to reach a goal of $15,000 in 3 years, it might recommend making a $100 deposit every week depending on the risk you set. Investments are a mix of stocks and bonds. Bonds are better for the long term investments. When the market started dropping, I admit that I did adjust my allocations to be more conservative than they previously were set at.

Betterment is not a free service and there can be tax implications depending on what you invest and withdrawal. So far, it has only cost me $.10 to use the service. They also have programs where you can refer a friend and gain free management. For example, if your friend signs up, you get one month free management and they get three months free management. Refer three friends and you get free management for the year. Not a bad offer!

You do have the option to have automatic “smart” withdrawals taken out of your bank account. These are deposits to betterment that use an algorithm to decide the amount based on your spending patterns. Right now, I don’t think my spending patterns are stable enough to turn it on, but it is a neat feature. It makes it easy to save when you don’t have to think about it. For right now, I will keep up with my investing for the next year. Perhaps next year, I will post an update on how it is doing. For now though, I am happy.

Does anyone have a favorite tip that they use for saving money or a service you recommend for investing? Share it as a comment!