When it comes financial wellness, saving money can feel like an uphill battle.
Just like how overdoing it with carbs and sweets can sabotage your health, spending more than you can afford can be disastrous to your money.
Okay, duh. Knowing what’s good for you is one thing. Actually doing it is another. If it were easy, we’d all be rock stars with money. But changing habits and shifting mindsets can take a ton of work. The good news is that there are a few simple, no-brainer tactics to save more money. My favorite one? Automatic Savings.
Here’s why auto-saving is so awesome, and how Chime’s two features, Save When You Spend and Save When You Get Paid, can help your money situation.
Why Auto-Saving Is King
As a finance nerd who has been obsessed with money since I was young (weird but true), I’ve found that the less I have to think about managing my money, the better. Granted, I do spend more time than the average person looking at my spending plan and poking around money apps. But on the day-to-day, I don’t quibble over every purchase, or fret over whether I’m saving enough.
That’s because I’ve put as much as I can on auto-pilot. I’ve set up auto payment for most of my bills, and I auto-save for my goals. This includes tucking away funds for a trip to Vietnam, a splurge fund, and a birthday bash for my mom’s milestone birthday next year. I can enjoy guilt-free spending and feel good that my money is being squared away for things that are important to me.
If you’re concerned that auto-saving might mean a greater chance that a fishy transaction might slip past you, set up alerts. I check my main checking account every few days and get alerts for major transactions through a money-saving app.
So how can you get started auto-saving? If you’re a Chime member, here are two top ways:
Save When You Spend
How it works: Every time you pay a bill or make a purchase with your Chime Visa® Debit Card, the Save When You Spend feature automatically rounds up transactions to the nearest dollar. These round up amounts are transferred from your Spending Account into your Savings Account.
For example, if you spend $1.50 on a cup of coffee in the morning, the feature will round up your transaction to two dollars, and you’ll save 50 cents. Did you throw down $8.25 for lunch at the neighborhood sandwich shop? Save When You Spend will round it up to nine dollars, and 75 cents will go toward your Savings Account.
How to make the most of it: The more you use your Chime Visa® Debit Card, the faster you’ll build your savings. So, use it to pay for everyday purchases and bills, and watch your savings grow.
You’ll also want to determine how to best use the money in your Savings Account. It can be used for when you’re having a slow month workwise and barely scraping by. Or, you can use it to cover bills. Or, maybe you can use the funds to pay for unexpected expenses or minor emergencies.
The beauty of it is that you access funds in the account immediately. So there’s no lag time between when you need the funds and when they are available to you.
Save When You Get Paid
How it works: With Chime’s Save When You Get Paid, you can opt to automatically save 10 percent of each paycheck, with a minimum amount of $500. So, if you earn $500 one week from an employer, $50 of that will go into your savings.
If you get a steady paycheck, and your take-home amount for each paycheck is $1,500, then you’ll be stashing away $150 each pay period.
How to make the most of it: If you are a freelancer like me and aren’t sure how much you can reasonably save each month, start by linking your direct deposit with the employer that makes up the least amount of your income.
On the flip side, if you’d like to get aggressive with your saving, set up direct deposit with your employer that makes up the lion’s share of your monthly earnings. And, like with the Save When You Spend feature, you’ll want to decide how to use your saved up cash.
If you need to pay taxes every quarter, perhaps you can use that money for this purpose. Or, maybe those funds can be set away for another reason. By saving with intention, you can make the most of that 10 percent of each paycheck.
Science to Back It Up
You don’t have to take my word for it. There are actually studies that prove how auto-saving can make things easier. For example, The Center for Advanced Hindsight, a behavioral science lab, conducted an experiment on getting people to spend less – and budget wisely – right after they get a paycheck. The study found two major barriers to get people to spend less:
1. Cognitive load. Having to check your balance regularly to figure out if you can afford daily purchases is a royal brain drain. This led to a never-ending process of weighing different opportunity costs, and then being blindsided by changing or unexpected expenses.
2. Friction to saving. Those surveyed revealed that committing to an automated direct deposit is tough if the amount they can save changes from month to month. What’s more, there was too much friction to make manually saving small, incremental amounts worth the trouble.
With Save When You Spend, however, you’ll be spared the mental exhaustion. You won’t be quibbling about whether you can afford a given purchase. And, committing to saving a percentage of your paycheck each payday with Save When You Get Paid serves a similar function. If you’re a gig economy worker and are juggling a handful of different jobs with fluctuating income, it’s a lot easier to save a small percentage of each paycheck.
Start With the Easy Stuff
Financial wellness is a muscle, and forming the habits and behaviors so you can grow wealth is a long and hard journey. Starting with something as simple as automatic savings can give you a push in the right direction, as well as help you build momentum. Onward!