Saving money may not feel like your strong suit and it’s certainly easy to get off track and save less than you intended when you’re not consistently saving a portion of every paycheck. Automating your savings via a deduction straight from your pay could be just what you need to get your finances in shape to ensure you reach your savings goals.
Is it time to automate?
Whether you get paid on a weekly or monthly basis, you may have a hard time regularly setting aside money for a savings account. Many people fall into the habit of saving only what is left over after paying their living expenses and covering the cost of discretionary purchases. The challenge here is that you likely won’t have a consistent amount being deposited into your savings account every pay day, which means your savings contributions will be at best fairly unpredictable. If you fall into this camp, now may be the time to automate your savings.
Benefits of automating your savings
Automating your savings can turn your savings deposit into another monthly expense. This can help you prioritise your savings contributions, reducing the temptation to spend those funds without planning ahead and ensures that you pay yourself first on pay day and that you don’t forget to make the deposit into your savings account.
Some other benefits of automating your savings include:
- Save time: One of the biggest benefits of automating your savings is that it will free up time. Turning your savings contributions into a recurring monthly expense means you don’t have to keep thinking about how much you should save, when to make the deposit or transfer and whether you will meet your savings goals by the end of the quarter or year. Automation gives you peace of mind that your savings are growing steadily with little to no effort on your part and you can focus on other things.
- Save more over time: You could end up saving more when money is automatically transferred into your savings account. Having your savings transferred as soon as your paycheck hits your bank account means you’re regularly getting a guaranteed contribution that doesn’t change from month to month.
- Get out of debt faster: If you’re determined to pay off credit card balances or other debts you could automate your savings into an account specifically for your debt. Then you can pay these expenses off in one lump sum when you’ve built up enough funds. The automatic deposit will help you stay on track, making it easier for you to pay off debts quickly so you don’t incur too much interest.
Steps to automate your savings
Automating your savings starts with setting a realistic savings goal by calculating how much you can reasonably afford to save each month. Once you have a grasp of your own finances you can then decide how aggressive you want to be with your savings goal.
For example, if funds allow you could start with 5 percent of your paycheck and then in time aim for 10 percent or even 15 percent if you want to be really aggressive with your saving.
The next step is to consider join a credit union such as TransaveUK where you can make a regular payment into a savings account direct from your pay (the minimum payment is £5 per month). You can then change the amount going forward whenever you want to in line with your financial circumstances.
Finally, be sure to track your progress after you automate your finances. It can be satisfying to see your savings account grow each month once you automate your savings and it’s easy to do this using Transave’s online account and app. Make sure you keep tabs on your running balance and avoid the temptation to ‘cash out’ before you reach your bigger goals.