How to Automate Your Savings for Financial Peace of Mind

how to automate your savings

Are you struggling to save money? Do you dip into your savings account more often than you’d like? You’re not alone. Saving money can be difficult, especially when you have competing financial priorities.

But here’s the thing: saving money is crucial for your financial well-being. Without a savings cushion, you could be putting yourself at risk for financial emergencies and excess stress.

That’s why we’ve created this guide on how to automate your savings. This blog post will explain the benefits of automating your savings, provide step-by-step instructions on how to set it up, and give you tips for maximizing your savings potential.

Keep reading to discover the tools and knowledge you need to start saving money effortlessly!

What Does It Mean To Automate Savings?

Automating savings is a simple yet effective way to save money effortlessly. As per Investopedia, automating savings means setting up automatic transfers from your bank account to your savings account at regular intervals, such as every two weeks.

This means you don’t have to remember to transfer money manually, as it is done automatically according to your instructions. 

For example, say you want to save $100 every paycheck.

  • You can set up an automatic transfer from your checking account to your savings account on the same day you get paid. This way, a portion of your paycheck will be automatically saved without you having to take any additional steps.

Automating savings can involve recurring transfers to different savings goals or investment accounts. 

For example, you can set up automatic transfers to a vacation fund, an emergency fund, or a retirement account. This allows you to save for multiple financial goals simultaneously.

Automating savings saves time and effort and helps you build a consistent savings habit. 

When your money is automatically transferred to your savings or investment account, you’re less likely to spend it. As a result, you can build up your savings over time.

 

What Are the Benefits of Automating Your Savings?

Automating your savings has several benefits that can help you achieve your financial goals.

Here are some of the key benefits:

  • Consistent saving: Automating your savings ensures you regularly set aside a consistent amount of money. You won’t have to remember to transfer money manually, which reduces the risk of forgetting or skipping a transfer.
  • Improved discipline: Automating your savings takes the decision-making process out of your hands, reducing the temptation to spend your money impulsively. This leads to more disciplined financial habits, which can help you avoid unnecessary expenses and achieve your long-term financial goals.
  • Time savings: By automating your savings, you eliminate the need to transfer money between accounts, saving you valuable time. You won’t have to worry about missing a transfer or spending time checking and adjusting your savings account balance regularly.
  • Goal achievement: Automating your savings can help you achieve your savings goals more efficiently. You can set up automatic transfers to coincide with your payday for immediate savings, helping you reach financial goals faster.
  • Flexibility and control: Automating your savings doesn’t mean you’re locked into a set amount or schedule. You can adjust your automatic transfer amount or frequency at any time to better fit your changing financial situation.

 

Automate Your Savings in 8 Steps

Now that you know the benefits of automating your savings, it’s time to learn the steps to get started.

Here are eight easy steps to help you start automating your savings:

 

1. Determine Your Savings Goal

Before automating your savings, it’s important to determine your savings goal. Consider what you’re saving for — an emergency fund, a down payment on a house, a vacation, etc. 

Set a specific amount you want to save and a deadline for achieving it. This will give you a clear target to work towards and help you stay motivated.

For example, if you’re saving for a down payment on a house, determine how much you need to save and by what date. Divide the total amount by the number of months you have to save to determine how much you need to save each month.

If you’re just starting, The Consumer Financial Protection Bureau recommends checking if your bank has a minimum amount for automatic transfers. That way, you can gradually increase your contributions as you get more comfortable with the process.

Remember to make your savings goal achievable and realistic. It’s better to save a smaller amount consistently than to try to save too much and give up after a few months.

 

2. Choose the Right Savings Account

Choosing the right savings account is important when automating your savings. Look for an account with a high-interest rate and low fees. Some accounts also offer incentives for setting up automatic transfers.

Consider your savings goal and how quickly you want to achieve it. A high-yield savings account may be a good choice if you save for a short-term goal, such as a vacation. 

If you’re saving for a long-term goal, such as retirement, an investment account may be a better option.

Research different banks and financial institutions to find the best account for your needs. Don’t forget to consider the convenience of the account, such as online banking and mobile apps.

You should review the terms and conditions of the accounts you’re considering to check for any fees the bank may charge. 

This step is crucial to avoid unexpected fees that could reduce your savings progress. It’s always better to be safe than sorry!

 

3. Calculate How Much To Save

Once you’ve determined your savings goal and chosen the right savings account, it’s time to calculate how much you need to save. This will depend on your savings goal and the timeframe you want to achieve it in.

 

To calculate how much to save each month, divide your savings goal by the number of months you have to save.

 

For example, if your savings goal is $10,000 and you want to achieve it in two years, you’ll need to save $416.67 monthly.

Remember to factor in any interest or investment returns you expect to earn on your savings.

 

4. Decide on a Schedule for Automatic Transfers

Deciding on a schedule for automatic transfers is an important step in automating your savings. Consider your pay schedule and when you’ll likely have extra money in your account.

For example, if you get paid twice a month, you may want to set up automatic transfers for the day after your payday. This ensures you have money for bills and other expenses in your checking account, and the remaining balance is transferred to your savings account.

You can also consider setting up automatic transfers weekly or bi-weekly, depending on your needs and preferences.

When figuring out the best schedule for your automatic transfers, consider the timing of your bills. You don’t want to risk overdrafting your account by scheduling transfers simultaneously with your bill payments. 

Make sure to plan accordingly to avoid any potential financial hiccups.

 

5. Set up Automatic Transfers

Setting up automatic transfers is one of the most important steps in automating your savings. 

By setting up automatic transfers, you can ensure that you save a portion of your income consistently. This also eliminates the need to transfer money into your savings account each month manually.

To get started, log into your bank account and find the option for automatic transfers. From there, you can select the amount and frequency of the transfers. 

Make sure you choose a feasible amount that fits your budget. For example, if you get paid bi-weekly, you can set up a recurring transfer for the day after payday. 

This way, you won’t have to think about transferring money each time you get paid. You’ll also be less likely to spend the money that’s earmarked for savings.

 

6. Monitor Your Progress Regularly

Once you’ve set up automatic transfers, it’s important to monitor your progress regularly. This can help you stay motivated and adjust your plan as needed. 

You can track your progress through your:

  • Bank account
  • Financial apps
  • Spreadsheets

If you’re falling behind on your savings goal, don’t panic. Revisit your budget and make adjustments as needed. Maybe you can cut back on some expenses or look for ways to increase your income.

You should check your budget yearly to catch unexpected expenses. Doing so also allows you to spot irregular expenses like medical bills or car repairs.

 

7. Adjust Your Savings Plan as Needed

Your savings plan is not set in stone. You may need to adjust it as your financial situation changes. You can increase your monthly savings if you get a raise or earn more income.

Alternatively, if you encounter unexpected expenses, you may need to reduce your savings temporarily. The key is to be flexible and adjust your plan to ensure you can continue to save consistently.

 

8. Celebrate Your Milestones Along the Way

It’s important to celebrate your savings milestones along the way. Reaching a certain amount in your savings account or paying off a debt deserves recognition. 

Take the time to acknowledge your progress and pat yourself on the back. This can help you stay motivated and focused on your financial goals. 

You can celebrate by having a nice dinner or buying something you’ve wanted for a while. Just make sure you don’t overspend and undo all the progress you’ve made.

 

Tips for Sticking to Your Savings Goals 

Sticking to your savings goals can be challenging, but there are ways to help you stay on track.

Here are some additional tips to keep you motivated and focused:

  • Educate yourself: Learn more about personal finance and investing to help you stay motivated and make informed decisions about your savings. You can start by reading books, watching videos, or listening to podcasts on financial topics that interest you.
  • Find an accountability partner: Ask a friend or family member to check in with you regularly and hold you accountable for your savings goals. Finding someone to keep you on track can be a game-changer if you’re having trouble staying motivated.
  • Identify your spending triggers: Utah State University suggests asking yourself what makes you overspend or what obstacles prevent you from achieving your financial goals. By identifying your triggers, you can proactively work to avoid them and stay on track with your savings goals.
  • Avoid impulsive purchases: When tempted to make an impulsive purchase, wait 24 hours and reconsider whether it’s worth the cost. Regretting impulsive purchases can lead to frustration and prevent you from achieving your savings goals.
  • Use visual aids: Create a chart or graph to track your progress and keep it somewhere visible to remind you of your goal. You can also create a board on Pinterest or a similar app and add pictures of what you want to save to keep yourself motivated.
  • Limit your spending: Set a limit on your spending each month and stick to it. You don’t have to deprive yourself of all pleasures completely, but finding a balance between saving and spending is important.
  • Reward yourself: Saving doesn’t have to be all work and no play. As we mentioned, it’s important to celebrate your progress and indulge in small rewards.
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Take Action Today and Achieve Your Financial Goals With 121 Financial Credit Union

Automating your savings can help you achieve your financial goals and build wealth. Limit spending, avoid impulsive purchases, identify triggers, and educate yourself. By following the steps and tips in this guide, you can save more money effortlessly and efficiently.

Consider becoming a 121 Financial Credit Union member to support your financial journey further. We provide affordable financial products and services and free counseling to members. 

121 Financial Credit Union also provides savings and checking accounts to suit your financial needs. Contact us today to learn more and take advantage of our products, services, and member-focused approach.

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