How to Use Automated Savings Tools to Reach Your Goals Faster

Let’s face it: saving money can be hard. Between the allure of instant gratification and the constant drain of expenses, it’s surprisingly easy to let your savings slip away. But what if there was a way to make saving effortless, almost automatic? That’s where automated savings tools come in.

This blog post will explore how you can leverage these tools to significantly accelerate your progress towards your financial goals – whether it’s a down payment on a house, a dream vacation, or simply building a comfortable emergency fund.

Why Automated Savings Works

The biggest reason automated savings work so well is psychological. When you actively think about saving, it can feel like a chore. Automation removes the mental burden, turning saving into a habit you barely notice. This consistency is key to building a substantial savings buffer.

Types of Automated Savings Tools

There’s a surprising variety of tools available to help you automate your savings. Here’s a breakdown of some popular options:

Round-Up Apps: Apps like Acorns, Chime, and Digit round up your everyday purchases to the nearest dollar and automatically invest or save that change. This can add up quickly, especially if you're a frequent shopper.
Recurring Transfers: Most banks and financial institutions allow you to set up recurring transfers from your checking account to a savings account. You can schedule these transfers to occur weekly, bi-weekly, or monthly, based on your income and spending habits.
Employer-Sponsored Savings Programs: Some employers offer programs where a percentage of your paycheck is automatically transferred to a savings account.
Robo-Advisors (with Savings Features): Services like Betterment and Wealthfront can incorporate savings goals into their investment strategies, allowing you to build a diversified portfolio while automatically saving.
Cashback Savings Accounts: Some savings accounts, like those offered by Ally Bank, offer cashback rewards on your savings balance. This can effectively turn your savings into a passive income source.

Setting Up Your Automated Savings Plan

Here’s a step-by-step guide to getting started:

Define Your Goals: Clearly outline what you're saving for and how much you need to achieve. Having a specific goal will motivate you to stick with your plan.
Choose the Right Tool(s): Consider your spending habits and financial situation when selecting an automated savings tool. Do you spend a lot in restaurants? A round-up app might be a good fit. Do you have a regular paycheck? Recurring transfers could be ideal.
Start Small: Don't feel pressured to commit a huge amount upfront. Start with a small, manageable transfer amount – even $25 or$ 50 a month can make a difference.
Automate, Automate, Automate: Once you’ve set up your chosen tool, resist the urge to cancel it. The more consistently you automate, the faster you'll reach your goals.
Track Your Progress: Regularly check your savings balance and celebrate your milestones. This will keep you motivated and reinforce your commitment.

Resources to Explore

Acorns: https://www.acorns.com/
Chime: https://www.chime.com/
Digit: https://www.digitapp.com/
Betterment: https://www.betterment.com/
Wealthfront: https://www.wealthfront.com/

Conclusion

Automated savings tools can be a game-changer for anyone looking to reach their financial goals faster. By removing the friction and mental effort associated with traditional saving, these tools make it easier than ever to build a solid savings foundation. Start experimenting with a few options and find what works best for you – your future self will thank you!