We're facing a savings crisis, and Ben Stanway's app might be the answer.
Dream of retiring one day and enjoying a life of leisure? Dream on.
Retirement is fast becoming a flash in the pan, a brief quirk of history enjoyed by a few lucky generations, unless millennials take drastic action.
That was the finding on the BBC World Service’s The Inquiry podcast this week which concluded that volatile stock markets, low interest rates and an ageing population could quickly render retirement (and your pension) to the history books.
It’s a situation only made worse by the fact that millennials today are notoriously bad at saving.
Those who grew up during the late 1990s credit card and mortgage boom were raised on the mantra of borrowing rather than saving.
But today modern apps and services, like Monzo and Moneybox, are springing up to help this generation re-learn the skills of saving.
We first met Moneybox in January, but this week the app finally arrived on the App Store, with a plan to entice millennials to put their money away, saving for a rainy day.
“By making it easy, engaging and accessible, we hope to encourage people to get into the habit of setting money aside little and often, and help a whole new generation start investing towards their future,” says Moneybox co-founder Ben Stanway.
The idea is simple.
By connecting to your bank account Moneybox can ‘round-up’ your spending, like the 20p on a £2.80 coffee, and whisk this away into a stocks and shares ISA.
It sounds too good to be true, but Stanway is confident that people will get hooked on rounding up.
“People really like rounding up their spending, it’s like putting your life on autopilot,” he told The Memo.
During Moneybox’s testing people rounded up an average of 30 purchases a week, worth about £8.40 or £440 a year, on top of weekly or one-off deposits into their ISAs.
Don’t think Moneybox will turn you into a millionaire overnight however, if you invested £1,000 and added £50/month in roundups since 2007, you’d have made an additional £1,662 by 2016.
With today’s rock bottom interest rates, that’s still better than you could expect from the bank.
We’ll have to wait and see whether it’s enough to help you retire on.