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The Psychology Behind Saving Your Change

May 25, 2018

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When it comes to getting your finances in order, establishing an emergency fund is often priority #1.

Life has a way of throwing unexpected expenses your way. Car repairs, parking tickets, medical costs, hurricanes—the list goes on and on.

But building your savings is easier said than done. It’s tough to forego the instant gratification of spending today (you swear that $4.75 Venti White Chocolate Mocha is a NEED, not a want), in favor of some future hypothetical.

Despite our best saving intentions, it’s all too common to find yourself with too many needs—and not enough paycheck.

Say you only have a few bucks left over at the end of the month. Might as well blow through the last of it, right?


While it may not feel like your spare change is adding much value to your savings today, making a habit of transferring small, manageable amounts into your savings can have a tremendous impact over time—and not just on your cash reserves, but also on your mindset.

Saving is an easy habit to start

This isn’t merely speculation: the power of taking baby steps to reach one’s larger goals is a proven method. B.J. Fogg, a Stanford University psychologist and researcher, champions tiny habits as the most practical and effective way to establish new, positive behaviors.

“When you achieve a goal by integrating simple daily habits into your life, no matter how small, you gain a confidence that helps pave the way to reach bigger goals,” explains Fogg.

Major goals, like paying down debt or losing 50 pounds, can feel unattainable and overwhelming, to the point where we lose motivation and stop working toward them altogether.

But by training your brain to recognize small milestones as daily achievements, you can change your long-term behavior without relying on (highly-fluctuating) willpower.

Now make it automatic and hands-free

Varo’s Save Your Change feature is grounded in this psychology.

It’s a financial health tool that can help grow your savings by hundreds of dollars per year through bite-sized, attainable adjustments. And by automating the process, we’ve made it simpler than ever to commit to saving. No willpower needed.

When you turn on Save Your Change, you create a daily savings habit through tiny, automated contributions. Varo will automatically round up your Varo Bank Account transactions (that’s either a purchase with your Varo Visa® Debit Card or an automated bill pay) to the nearest dollar, and transfer the difference directly into your Varo Savings Account.*

Now, your $4.75 latte comes with a side of 25¢ savings. You’ll hardly miss your quarter, but the act of saving 25¢ benefits both your psyche and your savings account.

Before you know it, you could accrue a sizable savings balance with little to no effort. In fact, you could probably toss an extra $365 or more into your savings in the next year.**

Varo also rewards savers with a high-interest rate, so every penny saved is a penny working to make you more money. Varo’s 1.50% Annual Percentage Yield (APY) is significantly higher than the average rate offered by the top 5 largest national banks.***

At Varo, we believe your bank account should play an active role in helping you achieve your financial goals. Automating a bite-sized savings contribution provides you a daily financial win—and lays the groundwork for reaching larger money milestones.

Cortnay Cymrot is a contributing writer for Varo.

*All transactions include purchases made with the Varo Visa Debit Card; direct debits (“ACH Debits”) from your Varo Bank Account by merchants, utility service providers, and other financial institutions; ACH transfers from your Varo Bank Account to another bank account you own using the Mobile App; Bill payments (“Bill Pay”) to third-parties made from your Varo Bank Account using the Mobile App.

**This amount is based on making two transactions a day for a total daily roundup of $1.

***Varo Annual Percentage Yield (APY) is accurate as of 07.01.2018. Keep in mind, this rate is variable and may change. The balance in Savings must be at least $0.01 to earn interest. The average rate for the five biggest national banks in the United States is 0.02% according to

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