The Magic of Micro-Saving

Community Manager
Community Manager


(UPDATED 12/2020)


By Erik Martin


We have it so easy when it comes to spending: debit cards, credit cards, PayPal and Apple Pay® allow us to purchase whatever we like without a second thought, so swiping for energy bars to go with our coffees, or deals we just spotted while checking out at Target, becomes a reflex.


Fortunately, there’s a way to effortlessly save money, too — and turn tiny amounts into big savings.


Micro-saving is the process of regularly saving small amounts of money over time, and it’s something you can do nearly every day. Time out, you say: I have little left over to save after I pay my bills! The good news? You don’t have to earn a huge income to grow your savings, and better yet, it’s never too late to start.


In fact, opportunities for conserving cash present themselves regularly in the form of micro-saving: Consider your everyday trips to your favorite java joint. We get it—everyone holds up the daily cup of coffee as the poster child for cutting corners. Yet, it’s the most effective example where tiny tweaks can yield enormous results. So, instead of buying a coffee there, why not make your cup at home? Right there, you’ve probably saved a couple of bucks. Do so five days a week and that’s a painless $10 in your pocket.


But that $10 won’t do you much good down the road unless you have a system for storing it in some kind of savings fund. That means routinely transferring it to your account electronically or making deposits at your brick-and-mortar bank. It’s this extra step that ensures those dollars will actually be reserved for a rainy day.


“Transfer $10 a week over 52 weeks and you’ve suddenly got $520. Over five years’ time it becomes $2,600, and that practice over a decade adds up to $5,200,” says Matthew Angel, USAA personal finance advice director. “The extra value of this habit comes after seeing how quickly a few transfers or deposits can grow your savings balance. Then, you’ll be motivated to save even more.”


There are many ways to micro-save — some simpler than others. One time-tested strategy is practiced by Beth, a 24-year-old wife of a serviceman and mother of a 2-year-old boy. Her family settled into a new home in Marietta, Georgia, after a permanent change of station (PCS) and the budget is tight. So Beth clips coupons religiously and uses cash when grocery shopping. She knows, however, that these discounts earned can easily get lost in the shuffle. Hence, she immediately sums up the savings after every shopping visit and puts the extra dollars and cents into a family piggy bank — the contents of which she deposits into a real bank on a biweekly basis. Two months of this regimen nets her $152; after 12 months, careful couponing has built up more than $900 in savings surplus.


“Beth has created a system for savings that, although it produces small amounts, makes her feel more empowered about her finances,” Angel says. “It encourages her to save as much as she can. Now, if and when another PCS comes up, she’ll have moving expenses set aside.”


Ingrid Bruns engages in micro-saving in a different way. As the wife of a recently retired Air Force member and the mother of two daughters in college, she’s trying to beef up her retirement nest egg and teach her children good saving habits, too. Her two-pronged tactic? “Rounding up” and saving cashback rewards.


“When I swipe my ATM debit card and it comes up to, for instance, $18.24, I round it up to the next highest number — in this case $20. I calculate the difference — $1.76 — and soon afterward transfer that amount from my checking account to my savings account,” says Bruns, also a personal finance advice director for USAA, living in San Antonio. “It’s a little cumbersome and you have to stay committed to it. But it’s worth the effort.”


Bruns’ other micro-saving method is to consistently transfer any redeemed cashback rewards she earns from her credit cards to her savings account — instead of opting for a gift card.


Collectively, both micro-saving schemes, on average, yield Bruns about $240 every three months and up to $1,000 annually.


“We’ve experienced lots of deployments and moves over the years, so we know what it means when Murphy’s Law shows up at the door,” Bruns says. “Having an emergency fund saved is very important. The trick is to start early, start small and stay committed.”


Perhaps the easiest micro-saving method of them all is via electronic automation. Several apps, like Digit and Acorns, make it foolproof to save spare change, but they charge fees. Fortunately, USAA members can partake in micro-saving for free by using Text Savings. This resource uses a special algorithm to evaluate your available checking account balance. If you have over $100 in checking, it automatically moves small increments of money ($1–$9) into your USAA Savings account up to three times per week. You have the option to change these automatic settings to save more or less, and even manually transfer extra money via text message. Text Savings is just one of the many savings resources offered by USAA.


Daryl is a 21-year-old single airman stationed in Tampa, Florida, who turned to Text Savings after growing tired of living paycheck to paycheck. He likes it for its “out-of-sight, out-of-mind” simplicity. Seeing over $200 in his savings account only three months after enrolling in the program has inspired Daryl to save every spare penny; now, he’s on track to have $2,500 nested away after 12 months.


The moral to the story?


“Micro-saving takes what can seem like an overwhelming task — saving huge sums of money — and makes it small and achievable,” Angel adds. “And starting small and starting now can make savings add up faster than you’d think.”


USAA members can partake in micro-saving for free by using Text Savings. Not a member? Learn how USAA can help you manage your money.


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