The Benefits of Automating Your Savings Contributions

Let's face it: sometimes, saving money feels… difficult. We all know we should be saving, but life happens. Unexpected expenses pop up, and before you know it, the month is over and your savings haven’t budged. That’s where automating your savings contributions can be a game-changer.

What is Automated Savings?

Automated savings is the process of setting up regular, automatic transfers from your checking account to a designated savings account. It’s like an invisible payment to yourself – you don’t even think about it, but your savings are steadily growing.

Why Automate? The Powerful Advantages

There are a number of compelling reasons why automating your savings is a smart move:

Consistency is Key: The biggest benefit is the consistent effort. Instead of relying on willpower (which can be fickle), you’re locking in a regular contribution, making saving a habit.
"Pay Yourself First": This strategy, championed by authors like Dave Ramsey, involves prioritizing savings before you spend money on wants. Automating makes this significantly easier.
Small Amounts, Big Impact: Even small, regular contributions add up over time, thanks to the power of compounding interest. You don’t need to make huge sacrifices; even $25 or$ 50 per month can make a noticeable difference.
Reduces Temptation: When the money is automatically transferred, you’re less likely to spend it on impulse purchases. It’s simply not available to you.
Simplicity and Peace of Mind: Let’s be honest, managing finances can be overwhelming. Automating reduces the mental load and takes the guesswork out of saving.

How to Set Up Automated Savings

Here's a basic guide to getting started:

Choose Your Savings Account: Select a savings account with a competitive interest rate. Online banks often offer better rates than traditional brick-and-mortar banks.
Set Up Recurring Transfers: Most banks allow you to schedule recurring transfers directly from your checking account to your savings account. You can typically do this through online banking or the mobile app. You’ll need to specify the amount, frequency (e.g., weekly, bi-weekly, monthly), and the start date.
Consider Round-Ups: Some banks and apps (like Acorns) offer “round-up” savings, where every purchase you make is rounded up to the nearest dollar, and the difference is automatically transferred to your savings account.
Start Small: If you're new to saving, begin with a manageable amount and gradually increase it as you get comfortable.

Resources to Explore:

Acorns: https://www.acorns.com/ (Offers round-up savings and investment options)
Betterment: https://www.betterment.com/ (Automated investment platform)

Conclusion

Automating your savings contributions is a simple yet incredibly effective strategy for building a solid financial foundation. It’s a proactive step towards achieving your financial goals and offers a level of convenience and consistency that can significantly improve your savings habits. Don't delay – start automating your savings today!