Can This Smart App Help You Save £11,000?

Plum is a smart money app designed to automate savings, making it easier for users to build a savings habit without the usual effort. By regularly setting aside money based on individual spending habits, Plum allows users to choose from various savings accounts and investment options, helping to realise financial goals such as buying a home or preparing for retirement.

Last updated: 27 October 2023 (BST)

Key Takeaways

• Plum automates savings through features like Auto Savers, making saving effortless.
• Users can choose from competitive savings accounts, including Cash ISA and Lifetime ISA (LISA).
• The app offers various investment options, allowing users to diversify their portfolios.
• Matthew Mills, a satisfied Plum user, increased his savings significantly using the app.
• Government bonuses are available for first-time home buyers through the LISA.

The Need for Automated Savings

In an age where financial literacy is increasingly paramount, many individuals find it challenging to save consistently. The pressures of daily life, alongside rising living costs, make it easy to prioritise immediate expenses over long-term savings. This is where Plum comes in, addressing the common struggle of saving by automating the process.

How Plum Works

Plum utilises a sophisticated algorithm that tracks your income and spending patterns, making it easier to set aside money without you having to think about it. The app offers various savings strategies through its Auto Savers feature, allowing users to customise their saving habits according to their financial goals.

Smart Saving Rules

The application features several smart saving rules, including:

• Automatic: The default setting that saves what you can afford each week.
• Pay Days: Automatically saves a set amount every time you receive a paycheck.
• Naughty Rule: Saves money whenever you shop at a retailer you consider a guilty pleasure.

While some of these features are free, be aware that others may require payment, so it’s essential to review the terms and conditions before committing.

User Experience: Matthew Mills' Journey

Matthew Mills, a 31-year-old sales account manager from Gloucestershire, is a prime example of how Plum can transform saving habits. Struggling to save money just five years ago, he found that Plum provided the structure he needed.

Setting Up Savings Goals

Matthew has embraced nearly all of Plum's Auto Savers, including a significant amount set aside for his Pay Days. “I’ve got £500 set up for that every time I get paid,” he shares. Additionally, he uses the app’s Splitter tool to allocate funds across various savings accounts, including a Self-Invested Personal Pension (SIPP) and a Lifetime ISA.

Investing in the Future

Matthew has also diversified his savings by investing in six different funds, focusing on ethical options like a Climate Change Focused fund. This allows him to align his financial goals with his personal values while working towards a sustainable future.

The Benefits of a Lifetime ISA

For many young people, buying a first home can seem like an insurmountable challenge, especially with property prices continuously on the rise. Plum offers a Lifetime ISA, which allows users to save up to £4,000 annually, with the government contributing a 25% bonus. This means if you save the full amount, you could receive a £1,000 bonus each year—an attractive incentive for those looking to get onto the property ladder.

Understanding the LISA

The Plum LISA currently offers an attractive interest rate of 4.40% AER (variable) for the first 12 months, which includes a 1.03% AER (variable) bonus. However, it’s crucial to be aware of the withdrawal conditions: any funds taken out for purposes other than purchasing your first home or retirement could incur a government penalty, potentially resulting in a loss of some of your savings.

Financial Growth Through Plum

Thanks to Plum, Matthew now has over £11,000 saved across all his accounts. He recalls, “It’s been brilliant—without it I wouldn’t have saved and invested nearly as much money as I have.” His journey illustrates how automated savings can lead to substantial financial growth and peace of mind.

The Importance of Regular Review

While Plum automates savings, users should regularly review their financial situation to ensure that the automation aligns with their changing circumstances. This proactive approach can help maintain a healthy financial trajectory.

Conclusion: Embracing Financial Independence

Plum exemplifies how technology can simplify personal finance management, making it accessible for everyone. As users like Matthew Mills demonstrate, the app can help you gain control over your financial future, enabling savings and investments that may have once felt out of reach. With Plum, the path to financial independence is not just a dream; it’s a tangible reality.

How could automating your savings change your financial outlook? #PlumApp #SmartSaving #FinancialIndependence

FAQs

What is Plum and how does it work?

Plum is a smart money app that automates savings by regularly setting aside money based on your income and spending habits, helping users build a savings habit effortlessly.

What are the benefits of a Lifetime ISA?

A Lifetime ISA allows you to save up to £4,000 annually for your first home or retirement, with a government bonus of 25% on your savings, making it an attractive savings option for young adults.

Are there any fees associated with using Plum?

While many features are free, some of the Smart Saving Rules may incur fees. It's essential to review the app's terms and conditions to understand any potential costs.

Can I withdraw money from my Lifetime ISA anytime?

Withdrawals from a Lifetime ISA are restricted. You can only take out funds for your first home or retirement; other withdrawals may incur a 25% penalty on the amount withdrawn.

How can I track my savings progress with Plum?

Plum provides an overview of your savings and investments through the app, allowing you to track your financial progress and adjust your savings goals as needed.