Does this sound familiar? You plan to save. In fact, this is going to be the month where you finally save enough money to get a decent cushion in your savings account.
Payday hits and things are going great. You pay your rent, buy groceries, head out to a quick dinner, and fill up your car with gas. Then, your kid needs $20 for a field trip, you come across a really interesting book and buy it for $15, and you decide to meet a friend spontaneously for lunch. Days go by and without realizing it, you get to the end of the month.
While you had planned to save, there just isn’t much left.
If month after month you find yourself saving less than you planned — or not saving anything at all — it might be time to automate your savings.
What does it mean to automate your savings?
Automation makes a lot of things in life easier.
For example, with automatic bill pay, you can easily pay bills without having to remember to log in and make a monthly payment. This helps you pay bills on time and avoid dreaded late fees.
Bills aren’t the only things you can automate. You can also automatically pay your taxes. Through payroll withholdings, for instance, taxes can be deducted automatically from your paycheck.
So, why not automate your savings and make your life easier? To do this, simply automatically send money from your bank account directly into your savings or investment account. This way your money moves without you needing to do a thing.
Another common way you can automate savings is to have a portion of each paycheck immediately sent to a savings account or retirement account.
Automation helps you seamlessly move your money – making it out of sight, out of mind.
Why is it important?
Let’s face it: Many of us just aren’t great at saving money. In fact, a Federal Reserve survey found that 40% of Americans don’t have $400 in the bank to help them in case of an emergency.
Here’s the problem: Many of us view savings in the wrong light. We think that we can only save leftover cash at the end of each month – after we’ve paid for everything else. In a perfect world, that might be easy.
But things come up. You get invited to see a movie and it’s only $15. Your child needs a new pair of shoes or money for a field trip. You want to have friends over for dinner, so your grocery bill climbs a bit more than you expected. If you look at what you can save in light of these unplanned expenditures, you’re unknowingly cheating yourself out of a stable financial future. You’re prioritizing paying for everything else, rather than putting money aside for the future you. When you save that way, you simply aren’t saving enough.
Automating your savings flips the equation.
Rather than saving only what’s left at the end of the month, automating helps you move money to savings first and live off the rest.
Having money go to savings first — automatically — means that you don’t have to use willpower or have a huge amount of motivation to save. You simply have to set up the transaction once and watch your savings account grow month after month.
Automation isn’t a cure-all
Automating your savings is a great life hack to help you save. But, it’s not a cure-all for every situation.
If you have variable income and need to save a different amount each month, automating a set dollar amount might not work. You’ll want to first work on budgeting on a variable income before you start automating your savings.
And don’t let automation make you lazy with your money. Sure, it’s really helpful to have money going directly into a savings account. But it’s still important to check in with your bank account regularly so you can ensure that there are no inappropriate transactions or fees hitting your account.
Get started today
Now that you know why it’s important to automate your savings, setting up automated savings doesn’t need to be difficult.
Plus, you can easily review why you should automate your savings with this article. And don’t forget that we make it easy with Chime’s Automatic Savings Feature. Check it out and start automating your savings today!