In personal finance, we often hear the advice to “save more” and “invest regularly.” But in a world filled with spending temptations, finding ways to put money aside for savings or investments consistently can feel overwhelming, especially for beginners.
This is where micro-savings come into the picture—tiny, almost effortless savings that accumulate over time without requiring us to make major changes in our spending habits.
But is micro-savings really the revolutionary tool it’s marketed to be?
In this blog, we’ll explore what micro-savings is, how apps like Jar and Deciml use this concept to help people save and invest, and whether using these apps is a good idea for your personal finance journey.
Estimated read time: 5 minutes and 20 seconds
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Buckle up. Here we go!
What is Micro-Savings?
Imagine saving money without even realising you’re saving. Sounds magical, right?
That’s precisely what micro-savings is all about. It is a concept where you save small amounts of money frequently, without feeling a significant pinch in your day-to-day finances.
Instead of setting aside large chunks of money every month, micro-savings encourage you to save small amounts consistently—maybe just ₹10 or ₹20 at a time. Over time, these small amounts add up and help build a savings corpus.
Think of it like putting your loose change into a piggy bank every day. At first, it might not seem like much, but eventually, you will notice the piggy bank is filled with a significant amount.
The idea is to make saving as seamless and automatic as possible, so you hardly notice the effort.
How do Micro-Savings Apps like Jar and Deciml Work?
Now, let’s talk about how apps like Jar and Deciml have leveraged this concept of micro-savings to help you save and invest money without much effort.
1. Jar – Digital Gold with Every Spare Change
Jar is a micro-savings app that rounds off your daily transactions and invests the spare change into digital gold. For example, if you buy something for ₹38, Jar rounds the amount to ₹40 and the ₹2 difference is saved and invested in gold.
Jar’s approach is simple and revolves around making gold more accessible to the everyday person. Gold has long been seen as a haven asset, particularly in India, where many consider it a strong investment option to preserve wealth. With Jar, you don’t need a large sum to start; even your spare change is enough to build a small gold investment over time.
2. Deciml – Round-Off Savings for Mutual Funds
Deciml is another micro-savings app, but instead of gold, it helps users invest their spare change in mutual funds. Like Jar, Deciml rounds off every purchase you make to the nearest 10 and invests the difference.
For example, if you buy a coffee for ₹45, Deciml rounds it off to ₹50 and invests the ₹5 into a mutual fund. Currently, the app allows you to select between two regular mutual funds of Navi – Aggressive Hybrid Fund and Large & Midcap Fund.
The idea behind both these apps is to make saving and investing easier by automating small amounts that users won’t miss. By rounding up every transaction, they turn spare change into actual investments.
They also allow you to set aside and invest a small amount every day, week or month.
Do Micro-Savings Really Have a Long-Term Impact?
At first glance, the amounts being saved through these apps might seem insignificant—₹2 here, ₹5 there. It’s natural to wonder if such small amounts can make any difference in the long run. So, let’s break down the potential impact of micro-savings.
1. Consistency Over Time
The key to micro-savings is consistency. Even if you’re saving just ₹20 a day, that adds up to ₹7,300 in a year. Over time, that small change becomes a habit, and the regularity of saving (no matter how small) can accumulate into a decent sum.
In fact, this is one of the most important principles in personal finance—regular savings, no matter the amount, lead to wealth creation over time.
2. The Power of Compounding
In both apps, the spare change is invested, which means that not only are you saving, but your money is also growing. Thanks to compounding, even small investments can grow into significant amounts if left to grow over time. Compounding works best when given time, so starting early—even with small amounts—can be very powerful for long-term wealth creation.
For example, if you save just ₹20 a day and invest it in a mutual fund that gives an average return of 12% per annum, over 10 years, you could accumulate around ₹1,50,000. This is the magic of compounding, where your returns start earning returns.
3. Behavioral Benefits
One often overlooked benefit of micro-savings is that it encourage a saving habit without feeling like a sacrifice.
When you use apps like Jar and Deciml, you get accustomed to the idea of saving or investing small amounts with every purchase. This can eventually lead to better financial habits in the long run, as you become more mindful of your spending and savings.
Should You Use Micro-Savings Apps or Save Manually?
Now comes the key question—should you rely on apps like Jar and Deciml for micro-savings, or would it be better to save and invest manually?
1. Ease and Automation
The biggest advantage of these apps is the convenience and automation they provide. They remove the need for you to actively think about saving or investing, as they do the work for you every time you make a transaction.
If you’re someone who finds it hard to set aside money or tends to forget to save, these apps are a good way to make sure you’re at least saving something.
2. Small Savings Without Disruption
For those with tight budgets or irregular incomes, these apps allow you to save without disrupting your cash flow too much. Since the amounts are small and tied to your regular spending, you won’t feel a significant impact on your day-to-day finances, yet you’ll still be building a savings habit.
3. Investing with Little Capital
One of the biggest challenges many beginners face is the misconception that you need a large sum of money to start investing. Micro-savings apps like Deciml break this myth by allowing you to invest as little as ₹10 into mutual funds. This can be a great starting point for people who are hesitant to start investing because they think they don’t have enough money.
4. Limited Scope
While these apps make saving and investing easier, it’s important to recognize that the amounts being saved are quite small.
If your long-term financial goals are big, such as buying a house or building a retirement corpus, relying solely on micro-savings won’t be enough. You will still need to supplement these small savings with regular, more significant contributions towards your financial goals.
DIY Approach: Is It Better?
If you’re someone who already has a disciplined saving habit, you might not need these apps. You can manually transfer small amounts to your savings or investment account every month.
With a DIY approach, you have more control over how much you save and where you invest, but it requires a higher level of discipline and consistency. You won’t have the automation that micro-savings apps offer, so you’ll need to be proactive in setting aside money regularly.
Final Thoughts
If you find it challenging to save consistently or struggle to set aside money each month, apps like Jar and Deciml can be useful tools to automate your savings and gradually build a small investment portfolio.
However, keep in mind that these apps are not magical solutions. They simply apply the concept of micro-savings, which you can implement on your own with a bit of discipline.
That said, the investment options offered by Jar and Deciml are not necessarily the best. Jar invests in digital gold, which isn’t an ideal investment (read more about why here). Deciml offers two regular mutual funds from Navi, and regular funds typically come with higher fees compared to direct funds (read why you should avoid regular funds here).
Additionally, when registering for Jar, you may be asked to grant access to your CIBIL report, which suggests they might offer you loans in the future. This is something to be cautious about, so it’s best not to rely solely on these apps for your financial needs.
You can consider using these apps initially if you’re struggling to save and invest consistently. But as you become more confident and disciplined, it’s advisable to gradually take control of your own investments for better flexibility and long-term growth.
Also, if you are a beginner, you should start tracking your expenses. And Vrid app can help you track all your transactions across bank accounts and credit cards in one place!
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Still Curious?
If you are like us, who likes to analyse a little more or check out content in different formats, well you are in luck. Below you can find some suitable content we found.
Arthur Little – From micro-saving to big impact
Nikhil Kamath – How Auto-Saving Apps In India Are Booming With UPI
Note: We don’t have any affiliation with them. We are sharing links only for educational purposes. The opinions expressed by them belong solely to them and do not reflect the views of Vrid.
