Automating Savings: Grow Your Savings Account Faster With These 8 Steps

BY Zina Kumok

Automating Savings: Grow Your Savings Account Faster With These 8 Steps

We all know saving is important. But maintaining the discipline to consistently put aside a solid chunk of your income is difficult – whether it’s because you struggle with self-control or because you have other financial priorities that come first.

Thankfully, you can take some of the stress off yourself by automating your savings. Here are some easy ways to save money, and save yourself from anxiety.

1. Set Goals

First, before you start seriously saving, set a goal for how much you want to save – whether that’s a big goal, like retirement or a down payment on a house, or a small goal, like a new pair of shoes. Consider how much you want to save, and how much you expenses
realistically can save, considering your income and expenses.

The best way to do that is to set up a budget, including all your fixed expenses (rent or mortgage, car payment, loan payments, insurance and any subscriptions) as well as what you typically spend on things like groceries, gas, eating out, entertainment, personal care and more. Once you have a good idea of how much you spend every month, subtract that from how much income you have coming in every month, and you’ll have a good idea of how much you can realistically expect to save.

Then, you can adjust your variable expenses if needed (say, if you want to try to spend less on going out). But be careful not to adjust these expenses downward too much, or you’ll end up consistently spending more than you budgeted. If you have never budgeted or set financial goals before, apps like Mint or You Need a Budget can help.

2. Change Your Direct Deposit Settings

Most of us set up our direct deposit to transfer 100% of our paycheck into a checking account. But you can ask your company’s payroll department to send part of that paycheck to your savings account.

It works the same as if you have your insurance premium or 401k taken out of your paycheck. It’s deducted automatically – by the time your paycheck is deposited, any other funds are already taken out. This way, you won’t have to worry about saving whatever’s left at the month – it’s already done for you. You can choose to transfer a certain percentage of your paycheck or a certain amount every month.

3. Set Up Automatic Transfers

If you don’t want to change your payroll settings or if you’re self-employed, you can also set up your checking account to automatically transfer a set amount. You can choose the intervals at which it will transfer, whether that’s every two weeks or every month.

If you’re transferring between a checking and savings account within the same bank, your transfers will be free and likely unlimited. If you’re doing it between different banks, you might face some extra fees and limits. You can also choose whether those transfers will continue indefinitely or stop after a certain length of time or number of transfers. This is a great strategy if you have a specific amount you’re trying to save for.

4. Don’t Underestimate Loose Change

hello. (2)If you use cash often, putting your change in a piggy bank can be an easy way to save extra money, while also cleaning out your pockets.

You can even put it in your calendar – every Sunday, go around and put any extra change into a jar or old-school piggy bank. When the bank fills up, deposit the money at the bank. It may seem small, but for people who use cash on a regular basis, those coins can add up quickly.

5. Save While You Shop

Some cards have programs that round up your purchases to the nearest dollar and save the rest. Like the coin system, this is another way to save small amounts of money on a regular basis.

You’re less likely to miss 50 cents at a time than $50. If you’re new to the habit of saving, this is a good strategy to ease your way into it. Some of the banks and cards that offer similar services include Bank of America’s Keep the Change program, and Wachovia’s Way2Save program. Even better? The amount you save will likely earn interest as well.

6. Embrace Digital Assistance

Apps like Acorns, Digit and SavedPlus transfer money into savings or investments every time you make a purchase. If your bank doesn’t offer this feature, you can use one of these apps to do it for you.

Every few days, Digit transfers a few dollars into its savings account. When you need to withdraw the money, just send a quick text and Digit will transfer it back to you. With SavedPlus, you can set the app to transfer a percentage (between 5-20%) of what you spend into a savings account. Acorns rounds up your purchase to the nearest dollar and saves the rest.ankee swap

7. Stash Your Rewards

If you have a credit card where you have to redeem cash rewards manually, consider transferring that amount into a savings account every time you do. It’s one more way to earn extra money automatically.

Think of it as extra money. By putting those funds into a savings account, you don’t have to change your spending habits. The same goes for unexpected bonuses like tax refunds and raises. Consider saving the majority of your tax refund each year, and if you get a raise, consider transferring most or all of that amount automatically into savings every month.

8. Find a Saving Buddy

Sometimes, even the right strategy won’t work if you don’t have someone keeping you accountable. Ask a friend or family member if they want to be your saving buddy. You can set up regular times to meet up and discuss how your saving is going.1

If you really trust that person, you can even give each other access to your savings accounts so you won’t be able to hide the truth. You can also have them receive notifications if your savings gets low or when you reach a goal. Answering to someone else might make you more accountable to your own goals.

If you’re having trouble consistently depositing into your savings, consider one of these methods to keep yourself – and your savings account – honest. Try a combination of the methods listed here to see what works best for you.

Even if you’re on top of your finances, automating your savings is a guaranteed time saver, making it one less thing to worry about.