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How to Automate Savings for Success: Set and Track It

Start automating your savings today and watch your wealth grow steadily.

So you want to save money but find it difficult to save?

Saving money is a cornerstone of financial wellness, yet many struggle to consistently set aside funds from their income. For years, I believed I could never save money until I learned how to save by having it done automatically.

You see, life’s demands and daily temptations often derail the best intentions to save. However, a powerful solution exists that can make saving effortless: automating your savings.

What is Automated Savings?

Automated savings involves setting up regular automatic transfers from your checking account to your savings account. Just like paying bills or setting up direct deposits for your paycheck, automated savings treat your savings contribution as a non-negotiable expense that must be paid each month.

Why Save Automatically?

Automating your savings offers numerous benefits:

  1. Consistency: Automated transfers ensure that a portion of your income is consistently allocated towards savings, regardless of other financial obligations or distractions.
  2. Removes Temptation: Automating your savings removes the temptation to spend the money elsewhere. Once the transfer is set up, the money is effectively “out of sight, out of mind,” making it easier to stick to your savings goals.
  3. Effortless: Once set up, automated transfers require little to no effort on your part. You can set and forget it, allowing your savings to grow steadily over time without requiring constant attention.
  4. Builds Discipline: Automating savings helps you develop discipline and consistency in your financial habits. It instills the mindset that saving is a priority, just like paying bills or covering other essential expenses.
Financial ObjectiveBenefits of Automated Savings
Emergency FundBuilding an emergency fund becomes easier with automated savings. Consistent contributions help you gradually build a financial safety net to cover unexpected expenses or emergencies.
Achieving Financial GoalsWhether it’s saving for a major purchase, funding a vacation, or planning for retirement, automated savings can help you reach your financial goals faster and with less effort.

How to Automate Savings for Success

By setting up automatic transfers from your checking account to your savings account, you can grow your savings over time.

Step 1: Set Clear Savings Goals

Before automating your savings, define your financial goals. Whether building an emergency fund, saving for a down payment, or planning for retirement, having clear objectives will guide your savings strategy.

Financial GoalDescription
Emergency FundSave $5,000 as an emergency fund to cover unexpected expenses such as medical bills or car repairs.
Down PaymentSave $20,000 for a down payment on a home within the next three years.
Retirement SavingsContribute 10% of monthly income to a retirement account to build a nest egg for retirement.
Travel FundSave $3,000 for a dream vacation to Europe in two years.

Learn about the purposeful savings goals.

Step 2: Assess Your Finances

Review your income and expenses to determine how much you can afford to save each month. Consider your financial priorities and allocate a percentage of your income towards savings. Make sure to include financial goals in your budget.

Step 3: Choose the Right Accounts

Select a savings account that aligns with your goals and offers competitive interest rates or investment returns. Consider factors such as accessibility, fees, and potential for growth.

Type of Savings AccountDescription
Traditional Savings AccountBanks and credit unions offer traditional savings accounts, a simple way to save money while earning interest. They typically have low minimum balance requirements and are accessible for everyday banking needs.
High-Yield Savings AccountHigh-yield savings accounts offer higher interest rates than traditional savings accounts. They are often offered by online banks and may come with no monthly fees or minimum balance requirements. They are ideal for savers looking to maximize their returns.
Money Market AccountMoney market accounts combine the features of savings and checking accounts. They offer higher interest rates than traditional savings accounts while providing check-writing privileges and ATM access. However, they may have minimum balance requirements and limited transaction capabilities.
Certificate of Deposit (CD)CDs are time deposit accounts that offer fixed interest rates for a specified term, ranging from a few months to several years. They typically offer higher interest rates than savings accounts but require you to lock in your funds for the duration of the term.
Retirement Savings AccountRetirement savings accounts, such as 401(k)s or IRAs, are specifically designed to help individuals save for retirement. They offer tax advantages, such as tax-deferred growth or tax-free withdrawals, making them valuable tools for long-term wealth accumulation.

Step 4: Set Up Automatic Transfers

Contact your bank or financial institution to set up automatic transfers from your checking account to your savings account. Based on your savings goals and financial capability, specify the frequency (e.g., weekly, bi-weekly, monthly) and transfer amount.

PROCESS
Action
Contact Your Bank
Specify Frequency
Determine Transfer Amount

Step 5: Treat Savings Like a Bill

This is what it’s meant to pay yourself first. Mentally categorize your automated savings contribution as a recurring bill that must be paid monthly. Treat it with the same level of importance as other financial obligations to reinforce the habit of saving.

Step 6: Start Small, Increase Over Time

If you’re new to automated savings, start with a modest amount you’re comfortable with. As you become accustomed to the process and your financial situation improves, consider increasing the amount of your automated transfers to accelerate your savings growth.

Step 7: Monitor and Adjust

Review your automated savings plan regularly to ensure it aligns with your financial goals and lifestyle. Monitor your progress and adjust as needed to accommodate changes in your income or expenses.

Conclusion

Automating savings is a powerful strategy. Start automating your savings today and watch your wealth grow steadily.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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