The easiest and most effective way to save is automatically. Think about it, this saving automatically is the exact same way that millions of employees save through 401(k) and other retirement programs at work. So, taking that same conceptโ that you can โset it and forget itโ and adjust to money going directly into savings would work for ANY savings goal you haveโ including saving for an emergency fund, homeownership, education, or even a vacation.
How to Save Automatically
Automatic savings simply means you have a process in place to save at regular intervals, whether thatโs monthly, weekly, or daily.
If you want to save automatically, we suggest one of these three strategies:
- Split to Save.ย Instruct your employer to direct a certain amount from your paycheck each pay period and transfer it to a retirement or savings account (or both). Traditionally, you can set this up using your employerโs direct deposit, ask your HR representative for more details and set this up today. We call this method โSplit to Save.โ
- Auto-Transfer.ย Every payday, your bank or credit union transfers a fixed amount from your checking account to a savings or investment account. Talk to your local bank or credit union to set this up.
- Scheduled Transfer. Choose a day of the month or a regular interval, such as every 2 weeks, to transfer a set amount from your checking account to a savings account. We particularly recommend this method for people with pay that varies, such as freelancers and those working in the gig-economy. Consider picking a lower dollar amount or a time of the month when many other automatic payments arenโt happening. Youโll set this up with your bank or credit union.
Not able to set those up because youโre paid by a physical check, in cash, or currently unbanked? You can still make saving a consistent habit!
- Save your loose change. Every day, put all of the loose change from your pocket or purse into a jar, and donโt spend it. If that jar starts to look tempting, take it to a local, federally insured bank or credit union to cash and deposit into a savings account with low to no fees. However, if youโve got a big jar: thereโs no harm in watching your automatic savings pile up- literally!
Why Automatic Savings Works
Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded. Soon you will be able to cover many unexpected expenses without putting them on your credit card or taking out a high-cost loan.
I Donโt Have Enough Money to Save
If youโre still in the stage of your savings journey where youโre reducing debt (which is saving!), then visit our resources to help youย pay down debt.
Remember, even while youโre actively reducing debt, everyone has the ability to start to save, even if it’s a small amount.. At America Saves, we say โStart Small, Think Big.โ You can start with only a small amount, and you can save daily, weekly, or monthly. Over time, your deposits will add up. Even small amounts of savings can help you in the future.
