Plum: An app to force yourself to save regularly, cut costs and potentially invest

Good news

Paradoxically, the increase in the bank book rate to 2% caused a reaction from all financial intermediaries that did not offer the desired savings account of the French. With such a rate, Livret A should attract investors to a large extent. The reduction of its negative real yield due to inflation above 2% is not necessary, because the rate of return of 2% without the slightest financial risk, available to all, fully guaranteed by the state, with full liquidity, remains unsurpassed.

Livret A at 2%, good for your savings

Victor Trokoudes, CEO and co-founder of Plum, reacts to the Livret A rate increase to 2%: “The increase in the rate on the bank book A from 1% to 2% is not a surprise in the current environment. It comes as inflation hit 6.1% in July 2022 for the year, the highest level since July 1985, and the European Central Bank decided on July 21 to raise key rates by 50 basis points for the first time since 2011. However, despite quadrupling over the past year to reach 2%, the Livret A book continues to offer a negative real return of 4.1% when compared to inflation. As a result, the Livret A rate should continue to rise, with a further increase likely on February 1, 2023. Still, economists expect Livret A deposits to pick up this year, as households historically tend to over-save when they pay taxes. free savings rates are rising. However, we know that the most difficult aspect of saving is related to the inertia of regularly putting money away, which also explains the €776.5 billion that will be “dormant” in current accounts in 2021, according to data from the Banque de France.“The only problem is that Plum doesn’t offer Livret A or even LEP, whose 4.6% rate will surely suit most users.

Plum, automatic saving

That’s why Plum makes saving automatic, so its users don’t have to do anything to start and continue saving. Thanks to Plum, In total, French users managed to save around €176 in June 2022which is 11% more compared to the previous month and 32% more compared to January 2022.

Force yourself to save

Plum helps savers who cannot save on their own. At regular intervals, Plum performs calculations to transfer the ideal amount to your Plum account. Gradually, the amount saved becomes more and more important. Whether you’re saving for a vacation, your first home, or just in case, Plum helps you reach your goals faster without breaking your habits.

Reduce your expenses

To maintain control over your finances in the face of inflation, it’s important to track your income and expenses and create a budget. It can be useful to “clean up” your expenses by reducing basic expenses (internet, phone, electricity), choosing a cheaper contract or simply removing unnecessary and forgotten subscriptions that burden the bank account by several tens of euros per month.

Belt tightening

This trend is already visible for French Plum users, as current bills (electricity, internet, telephony) decreased by 35% in June compared to January 2022. Users have also significantly reduced their costs, The number of visits to restaurants decreased by 47% (up to 231 euros per month on average in June)and 42.2% reduction in clothing costs (43 euros on average in June) and a 25% drop in traffic (€66 per month) compared to January. The same goes for entertainment spending, which fell by 43% in June to an average of €16.49.

Plum, no savings offered?

If Plum suggests investing the automatically saved money in stocks, that’s obviously just a suggestion. Unfortunately, offering investments with the risk of financial loss on the capital saved as a precaution does not really have a tinge of common sense. What Plum lacks is savings investment offers without the risk of capital loss, such as Livret A, LEP and other banking books.