Posted on Jun 01, 2021
Saving money isn’t about complicated budgets and deprivation. It’s about building the future you imagine for yourself one step at a time. And saving money doesn’t have to be a time-consuming struggle. In fact, you can automate the process.
Here are simple steps to automate your savings.
1. Open the right accounts
If all you have is a checking account, it’s time to open a savings account.
A savings account is a safe, accessible place to hold your money until you need it.
Maintaining a savings account, in addition to a checking account, makes it easy to earmark and protect your savings from being spent. Savings accounts also typically offer higher interest rates than checking accounts, so your money can make a bit of money as you save. And, because you can see the balance, a savings account also helps you track progress towards your goal..
2. Get into a “pay yourself first” mindset
You can save the money you don’t spend or spend the money you don’t save. It’s a simple difference that makes all the difference.
Waiting to save the money you don’t spend makes saving money much less likely. With that approach, it’s easy for budgets to balloon and for savings to take a backseat month after month.
Instead, save first, spend later.
Make saving money a priority in your budget and pay yourself first. Treat your savings contribution like a required bill. This mindset makes saving a consistent, dependable habit.
3. Use Direct Deposit and Automatic Deductions
Many companies allow you to split your paycheck between accounts. If you can, automatically deposit some of your paycheck directly into your savings account. This automatic contribution keeps your savings on track and operating without any additional effort.
You may also want to take advantage of automatic contributions to a retirement account like a 401(k). This is a great way to save for your future automatically. Ask your Human Resources department about your options and benefits.
4. Schedule regular transfers from checking to savings
Set it and forget it. A repeating, automatic transfer from your checking account to your savings account helps reduce your to-do list. Instead of having to remember to set aside time to make transfers, you can set it up once and let it work for you again and again.
You can customize and adjust the amount, timing, and frequency to work with your budget.
Remember, small wins add up. If you set an automatic transfer of just $20 a week, you could increase your savings by more than $1,000 a year.
5. Automate Your increases
Start where you can and grow as you can. Increasing your contributions over time is a great way to build up your savings without shocking your budget.
A great time to up your contributions is at the start of a new year or after a pay raise. Before you increase your lifestyle, increase your savings.
6. Create an automatic plan for windfalls
Is saving money part of your plan for windfalls and unexpected earnings? It should be.
Consider setting a personal policy to save a percentage of windfalls. That way you can act automatically. When you don’t have to decide in the moment, you’re more likely to think of your long-term goals.