7 Ways to Automate Your Savings
February 26, 2014 1 Comment
By Meg Favreau, Senior Editor of Wise Bread
Anybody who has ditched plans to eat a salad to scarf down a plate of nachos instead (like I did, um, yesterday) can tell you that even though we humans usually know what’s best for us, it’s sometimes difficult to actually do the right thing.
This is especially true when it comes to saving money — for emergencies, for retirement, or for almost anything else. But there is some good news. Studies show that once we do set money aside, we’re likely to leave it there. So how do we get ourselves to save in the first place? By automating! Here are six easy ways to do just that.
1. Sign Up for Your Company’s Retirement Plan
If your company offers a 401(k) or 403(b), this is one of the best options for automatic savings. Not only do these retirement plans automatically put money you earn into a retirement account before you have the opportunity to spend it, but most employers offer a contribution match. That means that for every dollar you contribute (up to a certain amount), or employer will deposit an equal amount into your account. That’s essentially free money, and it’s one of the biggest benefits you can get at a job. Take advantage of it.
2. Split Your Direct Deposit
If you have direct deposit, most employers will allow you to split your check between multiple accounts — so, instead of depositing all of your money into your checking account, you can set some to automatically go into savings.
3. Set Up a Regular Deposit to Savings
Even if you don’t have direct deposit, many banks will allow you to set up regular automatic deductions. For example, I have a checking account with a traditional bank, and I have a savings account with an online bank. I can set my savings account to automatically deduct from my checking account on every payday. The effect is the same as splitting a direct deposit — the money is in my savings account before I even know it’s gone.
4. Pledge to Save Certain Cash
You’re probably most familiar with this concept in the form of a piggy bank– at the end of the day, many people automatically put the change in their pockets into a jar, often to save for a specific goal, like a vacation. But there’s no rule saying that you have to stick to coins. Instead,
pledge to set aside every $5 bill that comes your way — or even every $10. This is a great way to reach medium-term savings goals, like buying new furniture.
5. Use a Cash-Back Credit Card
You should only follow this suggestion if you’re able to pay your credit card off in full every month and you won’t let credit card rewards and 0% balance transfer offers become an excuse for spending more than you normally would. If you fit this criteria, start making your purchases on a cash-back credit card. Then, at the end of every month, deposit that cash back directly into your savings.
Note from AACFCU: Take a look at our low rate credit cards. Our Platinum Rewards MasterCard gives you one point for every dollar you spend to be used for a variety of things such as airline tickets, household items and more. While you may not be able to redeem these for cash, you can use them to purchase other items that would normally come out of your monthly budget, therefore allowing you to save that original amount.
6. Automate Your Bills
Most utilities, businesses, and even lenders now allow you to set up automatic payments. There are two ways that this helps automate savings. First of all, automatic payments ensure that you pay your bills on time, saving you from late fees and possible dings to your credit. Secondly,
sometimes you can get a discount for paying automatically — for example, some cell phone providers will knock $5 off of your monthly bill if you sign up for the automated system. If you do begin paying automatically, just make sure to check your billing statements regularly to ensure there aren’t any mistakes and you’re not being charged for services you aren’t using.
7. Sign Up for Your Financial Institution’s Round Up Program
What if you could make yourself save a little bit every time you make a purchase? Several banks and credit unions offer “round up” programs that do just that. Every time you use a credit or debit card registered with the program, your financial institution will automatically deposit the
remainder of your change into a savings account. To get started, ask your bank or credit union if they offer this benefit.
Note from AACFCU: We don’t currently offer a “round up” program, but many of our members have found success in “rounding up” as they track their expenses in their register. If you don’t use a paper register, search for checkbook register apps on your smartphone or device. We’ve found several free apps that help you keep track of your account.
How do you automate your savings? Share your favorite money-saving tips for America Saves Week – an annual celebration of good savings behavior and financial responsibility.
Meg Favreau is the Senior Editor of money-saving blog Wise Bread — an award-winning website dedicated to help you live large on a small budget.