Have you ever wished you could put more money in savings? The goal can often feel daunting. But MarketWatch helps make it easy with information on how to make setting funds aside automatic:
What Is Automatic Savings?
With an automatic savings plan, you set a fixed amount of money to automatically transfer from your checking account (where your paycheck is usually deposited) to a separate savings account on a regular basis, such as every payday or once a month. You’ll choose how much money you want to transfer, when you want to transfer it and how frequently you want to transfer that amount. You’ll then set up an automatic transfer with your bank through your online account or by contacting your bank.
The advantage of automatic savings is that it makes saving money a habit. You won’t have to remember to transfer money manually or be tempted to spend it on something else. The money is saved for you without any extra effort, and your savings grow over time without you having to think about it.
Alternatively, many employers let you split up your paycheck into separate accounts when using direct deposit. That way, you can designate a portion of your paycheck to go straight to your savings account, separate from your take-home pay….
There are a few ways you can automate your savings. No matter which way you choose, you’ll usually follow these steps:
Determine Your Savings Goal
First, decide on a savings goal, including a deadline for that goal. Then, calculate how much you’ll need to save to reach that goal. For instance, if you want to have $1,000 in an emergency fund in five months, you’ll need to save $200 per month to reach that goal.
Choose a Savings Account
Once you figure out a savings goal, you’ll then need to figure out where to store your money for that goal. A high-yield savings account (HYSA) or a money market account (MMA) are great options to consider since they both provide security, accessibility and interest. Also, consider if you want multiple savings accounts for different goals…
Figure Out a Transfer Frequency
Next, choose the right frequency amount for your automatic transfers, such as lining up your transfers with your paycheck. If your goal is to save $200 per month and you get paid every other Friday, you might set up a transfer of $100 every two weeks. Alternatively, you may want to set up weekly transfers or one transfer per month, such as on the first day of the month.
Set Up Automatic Transfers
Once you figure out your frequency, set up automatic transfers from your checking account to your savings account. This is where you’ll set up your savings plan according to your preferences. Generally, banks will let you set up recurring transfers
Adjust Your Savings Plan As Needed
Adjust your automatic savings plan as needed. If your income or expenses change, you may need to update your transfer amount or frequency.
You can read the full article – including the types of savings plans and tools – here.
Saving money often requires discipline and planning. But when you make it automatic, you can set money aside without any effort.