Saving some of your money from each payday is a great way to build up wealth. But if it isn’t convenient, you may find that you end up skipping pay periods. It’s probably best to keep those savings deposits going, so you will want to make the process as painless as possible. Here are some tips to have an automatic savings account.
An Automatic Savings Account Makes it Easy
Start With Your Budget
Start by looking at your household budget. If you don’t have one, even though you do need one, you can make a budget for this exercise. Make a note of what you bring in each month. Then list all of your expenses, which includes such things as groceries, gas, utilities, and other essentials. This list will serve as a bare-bones budget.
Now, subtract your monthly expenses from your income. The result is your discretional income, and you use this for entertainment, personal care, and other such things.
From this subtotal, pick a number or a percentage. This amount will be what you put into savings each pay period. I would suggest that you add the savings deposit to your budget section.
Otherwise, you may be tempted to use it for other questionably discretional spending purposes. I think you know what I mean.
Set Up An Account With Auto-Deposit
Mechanically, it would work best if you used a dedicated savings account (banks even call them this to differ from checking accounts). Now set up an auto-deposit using your new account.
You’ll want it to move money to the new automatic savings account as soon as it comes in, and before you can redirect the funds. When you automate it in this fashion, there is a good chance that you won’t even notice that the funds are missing from your regular income.
Do a Savings Audit On Occasion
Hopefully, things are running smoothly after just a few pay periods. But don’t forget to check the numbers on occasion and see if you can tweak it for more money into savings.
You can also boost your account by taking any extra money you may get and put it straight away. In this way, you may not even notice that you had the small windfall, but over time it can add up substantially.
With a little planning, you can automate your saving process. You will find that it will grow its best when you keep your hands off. That is, once you have it automated, the best thing you can do is to leave it alone and let it grow. Now if only other things worked that smoothly.