Automate Savings? Is this the best way to save? Learn why (and how) you should automate your savings plan.
I believe we all have the best intentions when it comes to pay day. The plan is to put 10% of your income directly into the savings account. After all this is the first step in getting your emergency fund started.
Then, pay day comes and you don’t save. The reason? You probably found found something you wanted to spend your money on. Or, you put in extra hours and just want to blow your money. Or, perhaps you just didn’t think about it.
What happens then, when you need that savings you used for that new bag or to go to the concert. It is not there. That forces you to rack up credit card debt.
First and foremost you have to decide that you want to save money. Once you are committed, then you need to make sure your savings is automatic. The easiest way to do this is to automate savings.
Why automate? The reason is that if money is tight, you might just convince yourself that it is OK and you’ll just save next month. You begin to repeat this scenario over and over again.
If you are not sure if this will work for you, let me explain why it works to help you achieve your financial savings goals.
The main reason is that once you set it up, it’s done. No having to remember to do it every month. You just adjust your budget to include this amount going to savings.
When the money transfers from your main account into a savings account, you don’t have to think about it. You don’t have to manually move any money. Best of all, you don’t have to worry that you will forgo savings one month.
There are a couple of ways you can do this. You might see if your employer allows for your paycheck to be split into more than one account. This is how my husband and I do it. The main reason is that we never see the money. We just set up our budget and reduce our spendable income by the amount we save. It is never a thought for us and we never miss saving.
Another way it to check with your bank’s online system to see if you can set up a recurring transfer. This one will allow you to see the money transfer from one account to another. You just have to make sure that your budget includes this line item so that you don’t plan on spending it any of your line items, but rather have it marked as savings.
While we are very responsible with our money and know the importance of saving for items such as annual insurance premiums, birthdays, homeowner’s fees, etc, it can be tempting not to save money and just have fun with it. By having the money moved automatically into our savings account, we actually end up being inconvenienced if we need it for anything other than what it is earmarked for.
The reason is that we have to log in and force the money to move from one account to another. It takes more effort and work. It really makes the difference for us in helping us reach our savings goals.
The best thing about automating savings is that it truly helps you pay yourself first.Click To Tweet
There is no simpler way to do this than to have your savings funded before you pay for your budget expenses. You make your budget work with the money left over rather than trying to remember to set money aside.
So, how can you find money to save? The simplest way is to pay yourself any monthly payments of bills paid in full. For instance, if you have been paying $400 a month on your debts, you will want to continue that payment once the debts are satisfied. The difference is that you pay yourself instead of someone else.
I am honest when I say that when you start to automate your savings and adjust your spending, you really don’t miss the money. It is the simplest way to save.
Do you automate savings? How does that work for you?
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