Saving Money While You Sleep: Automate Your Savings Plan

Most adults understand the benefits of saving money over time. Whether you’re faced with unexpected bills or looking ahead to big purchases such as a house or a car, the ability to save affects your ability to reach almost any of your financial goals.

Saving also determines when you’re able to retire and how comfortably you’re able to live in your golden years. Yet despite the benefits of saving, it remains an ongoing struggle for many Americans who prioritize short-term spending over long-term saving and investing.

Saving money is a financial habit that takes time and practice. If you’re struggling to save money regularly, automatic contributions are a great way to ensure you’re meeting your savings goals without having to think about it. 

Developing a Savings Habit Can Be Challenging

There’s no shame in admitting you struggle to save on a regular basis. When you’re just starting out in your career, you often don’t have enough money to afford saving any significant amount. Most people are living paycheck to paycheck, focused on other financial goals such as paying down debt and, in general, keeping up with their bills.

But as you look ahead to long-term financial goals, saving is essential. Changing your spending habits midstream isn’t always easy. Even when using financial calculators to set goal amounts for how much you need to save, balancing savings against monthly spending can put consumers in a tight situation where they’re forced to choose—and when that happens, spending habits are always more familiar and easy than a commitment to savings. 

That’s exactly why it helps to have a system in place that forces you to save when you might not have the self-discipline to do it yourself.

Guaranteed Savings Goals Through Automated Contributions

Automatic contributions force you to stick to your savings plan when you might otherwise change your mind at the last minute. But they’re also a great way to set a savings plan and hold yourself accountable to reach those savings goals.

If you’re looking to reach a certain annual savings amount, figure out what you need to save on a weekly basis to reach that goal. Or, if you’re simply focused on putting part of each paycheck into savings, choose a realistic number and set up an automatic contribution.

If you’re looking for encouragement when setting a savings plan, use a savings calculator to find out how your money will gain value through the interest offered by a savings account. This can be helpful when seeking to understand the long-term value of your savings efforts, and it can encourage consumers to be more aggressive when choosing their automatic contribution amounts.

Tips to Increase Savings

Looking to maximize your savings opportunities? Consider these options to automate contributions in more ways than one:

• Schedule automatic transfers into savings accounts. This is similar to the “pay yourself first” method of saving, which recommends making savings deposits as soon as you get a paycheck rather than waiting until the end to see if you have any money left over. It also helps you stick to a consistent schedule.
• Deduct retirement contributions from your paycheck. These contributions are made pre-tax, which can reduce your overall tax obligations every year. Your employer might also offer matching contributions, which can increase your savings totals.
• Deposit one-time checks, such as tax refunds, directly into a savings account. It can be tempting to splurge on big-ticket items, but if you deposit directly into a savings account, you might be better positioned to resist the allure of spending it all in one place.
• Use small savings tools like Pocket Change to pad your savings efforts. These automated contributions are small on their own, but they can save you hundreds of dollars a year—and you probably won’t even notice the money’s gone.

If you’re struggling to save, automated contributions can be your best friend. As you get in the habit of making these contributions, you might even find yourself embracing new habits that allow you to increase your monthly savings amounts!