No affiliate links or compensation here. I just like the app.
My new favorite financial gadget is an app called Tip Yourself. The app is available on both iPhone and Android, and the premise is simple. Tip Yourself creates a virtual “tip jar” where you can deposit money for yourself. You sign up for the free service, put in your bank details, and Tip Yourself will send a couple of micro-transactions to your checking account. You confirm the amounts in the app when they appear. Once the accounts are linked, you can log in any time you like and make a small deposit–the app suggests increments ranging from $1 to $5–for any reason you want. The deposits are held in Tip Yourself’s FDIC-insured savings account, and you can withdraw them at any time.
The app has some built-in social features, with a global news feed and a customized friend feed that allows you to follow specific users. It took a bit of digging to find the latter, but it is the setting I primarily use for the social part of the app. Visually the app is cute and simple. In the first few weeks, I’ve tucked away $23 for myself. Since the app is so open-ended, it takes some up-front decision making on how to use it. Once I did, though, I’ve found a variety of ways it helps to boost my savings rate.
What Is My Tip Jar For?
One of the early things you’ll have to decide is what the money that goes into your tip jar is for. When I first heard of the app, my gut reaction was that I should use it to funnel more of my spending money into my Roth IRA. Smart, but boring.
Next November, I am also taking a trip with my best friend to the Wizarding World of Harry Potter in Orlando to celebrate turning 30. I need to save up enough of my spending money budget line to cover my half of the hotel room, my park tickets, and any incidental spending. The first two are easy for me to remember that I need to cover, and will be paid in advance. The last is more variable, and easier to forget about. Hence, Wand Money:
Giving the tip jar a “fun” goal to start was the most motivating way to go until I solidified my stashing habit. I suspect this will also be true for most people. It was also important to me that the money go towards a big, long-awaited goal, that I would definitely find more important than any other spending. I knew that way I could feel good about my tips. Once I established my Harry Potter spending money goal, I’ve found many reasons to tip myself.
Tips for Behavior Modification
There’s a guy on my work team who offers to go out and grab lattes from the delicious local café every Friday. I have often taken him up on his offer. Despite the tasty sugary deliciousness, however, lattes are not a good value for me now, because I’m limiting caffeine during the pregnancy. Paying $5 for a delicious drink and caffeine jolt is one thing. For a sugary decaf, I should probably pass.
Tip Yourself has made it easier to do so. If someone suggests a meal out or a latte and I want to go but am on the fence about whether I should go, being able to reward myself with a quick tip makes declining easier. Tip Yourself is a tangible reminder that my “no” now is really a “yes” to frozen butterbeer (or whatever less nerdy thing you might want) later.
Tips to Convert Spavings to Savings
Did you know “spavings” is a real word? I didn’t, until this post from The Lady in the Black. She defines “spavings” as “the amount of money you save from purchasing a discounted item.” In the article, several bloggers tried different tricks to try to turn their discounts on purchases, which otherwise get quietly re-absorbed back into budgets, into real savings. One blogger, Penny, used Tip Yourself for exactly this purpose.
Following her lead, I’ve done the same. I’ve tipped myself for remembering to buy a discount gift card for some family movie theatre trips, which saved us 25% on our visits. I’ve also tipped myself for taking the time to check the deductibles on our car insurance, saving $20 per month.
Most money from spavings goes back into our budget, to be used towards our overall financial progress. It makes the spavings difficult to quantify, though. Tip Yourself allows me to take a bit of that money and put it towards a goal in a visible and satisfying way. In turn, that also encourages me to look for more creative ways to “spave.”
Tips to Celebrate
Finally, I’ve used Tip Yourself to celebrate big wins. Did I tip myself $5 each for paying off the PMI on our house and our auto loan this month? You betcha. I have also tipped myself for more personal wins. The morning I nailed a big work presentation with zero notice after a horrible night of late-pregnancy insomnia definitely deserved that $1 tip.
It’s fun to reward yourself with celebratory treats. But, instead of the treat being a momentary trifle (like the aforementioned latte), Tip Yourself helps me convert those treats into meaningful, big-picture items. My hope is that I’m creating something akin to happiness compound interest. I still get the instant, small happiness jolt now from the tip that I would normally get from the treat, and an even bigger one later when I accomplish my tip jar goal.
But Why Not Just Use a Savings Account?
When I mentioned Tip Yourself on Twitter recently, a financial planner inquired how the app makes sense. After all, they effectively get to “borrow” the money in your tip jar while it’s there, earning interest in their savings account that is not passed on to you. Wouldn’t it make more sense to simply open your own separate savings account and do similar micro-transfers?
From a pure dollar perspective, the inquiry makes sense. Because of interest, I would not allow my tip jar to rise above a couple hundred dollars, just as I would not let a physical tip jar get too full. But, at the 1.25% the most high-yielding savings accounts offer, we’re talking about $1-$2 difference a year if the tip jar hovers around a couple hundred dollars (for an otherwise free app).
More importantly, what the financial planner’s question does not consider are the different ways people are actually convinced to change their behavior (which I’ve spoken about before). The social elements of Tip Yourself are really motivating for some people. They certainly raise the “fun” factor for me, and I am not particularly externally motivated.
Using the app is also easier than establishing new accounts, and more accessible for people who aren’t as interested in money as say, a personal finance blogger and financial planner. My best friend, who hates having to give much thought to money at all, loves the app because it’s so simple and positive.
For me personally, the biggest help Tip Yourself offers is the “out of sight, out of mind” factor. I would feel compelled to track a savings account I opened in Mint for security reasons and thereby be constantly aware of its balance. Having my tip jar divorced from our budgeting software motivates me to save more. The tip money still looks “spent” in my personal spending budget line, and I know I need to leave a margin in that line to pay for the other parts of my trip. Intellectually I know the tip jar is out there, but in practice Tip Yourself is helping me to double-save for my trip’s expenses.
If Tip Yourself encourages you to save just 2% more per year, or even just have more fun with saving, it’s worth it.
Have you tried Tip Yourself? If so, let me know what you think and how you use it.
Also, feel free to look me up on the app. I’m Ms. Steward, and thou shalt know me by the celebratory dancing Tom Hiddleston: