If you want to save money, but don’t, you aren’t alone. Even those people with the best intentions of saving a little from every paycheck will often fail to do it. But, the truth is consistent savings is the smart way to build up your accounts. The simple way to do this is to automate your savings so you can reach your financial goals.
SHOULD YOU AUTOMATE YOUR SAVINGS?
If you never save any money when payday arrives, then you should consider setting up your savings on autopilot. Rather than saving what is left after you pay your bills, you need to save before you pay them. It’s the most important thing to do on every payday.
Not only that, but the amount of your savings will never be consistent. If your goal is to save $50 a week, there may be times where that amount is only $35 and other weeks where you set back $45. While that is good, you still aren’t reaching your goals.
When you set up your accounts for an automated transfer on payday, you’ll never sway from that amount and will consistently save the amount needed.
Other helpful articles:
- Why You Must Use The Cash Envelope System
- Defining Wants vs. Needs and Making Them Fit Into Your Budget
- Increasing Your Savings When You Live Paycheck to Paycheck
WHY AUTOMATE YOUR SAVINGS?
The main reason to automate your savings is to that it forces you to do it. If you have money in your hand, you are less likely to save it and would rather spend it. Not only that but if money is tight, you might convince yourself that it is OK and you’ll save next month. You begin to repeat this scenario over and over again.
Also, it saves you time! No more having to remember to do it every single month. You include your savings in your budget. It is right there, so you see it as an expense, just like you do for your utilities and mortgage. But, rather than having to move the money yourself, it is done for you. Best of all, you don’t have to worry that you will forgo savings one month.
HOW TO SET UP AUTOMATED SAVINGS
When it comes to saving money, there are some simple strategies you can use to get your funds in the right account month after month.
Split your paycheck
Visit with your payroll department and see if they have an option to split the accounts where your paycheck gets deposited. Sometimes, they will allow a single check to be split and funded into more than one account. You never see the money hit your regular account as it goes from your paycheck to savings.
Set up bank transfers
If your employer does not have this feature, you can also set up automated transfers with your bank. Log in and create a transfer from your main account to your savings account to recur every payday. That way, as soon as the check hits your account, your savings amount is transferred and you don’t have to remember to do it.
Let your bank do it for you
If you are bad about setting up transfers and saving in general, you can have your bank help!! Some banks, such as Chime, will round up your purchases to the next dollar and move the additional amount into your savings account. Even if you spend $10.12, it will transfer $0.88 into savings. And, you don’t have to do a thing!
While it is not a consistent amount, it is an easy way to increase your savings with minimal effort.
HOW MUCH SHOULD YOU SAVE
If you have never saved before, it can be scary and you may not be sure how it will affect your budget. Start small by automating 5% towards savings. If your weekly paycheck is $750, that means $37.50 will to into savings every week, and you’ll not see it in your account as an amount you have to spend. You’ll also include $37.50 on your budget for that week.
If you notice you still have more money left at the end of the month (or pay period), you can increase it to 6%, then 7%, etc. Continue to do so until you reach the amount you want to set back each month.
WHY IT WORKS
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 have fun with it. By having the money moved automatically into our savings account, we 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 makes the difference for us in helping us reach our savings goals.The best thing about automating savings is that it helps you to make sure 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.
When you automate your savings and adjust your spending, you really don’t miss the money. It is the simplest way to save.