To begin with, I am not very good at saving money. So every month, I intended to keep some money aside but something always came up. These would be in the form of an unexpected bill, a capricious purchase or even sheer forgetfulness that ate into my savings resulting in frustration and hopelessness about ever overcoming it. All this changed when, one day, I discovered the magic of automating my savings.
Now you might think that automating your savings sounds like a complex thing to do; however, it is actually very easy. Below is how you can go about it: automatic transfers from your checking account into your savings account made every month by means of setting up your bank. When you put such money into investment accounts, they will assist you with more aggressive increases in wealth. The greatest thing about this is you don’t have to remember to move cash around because these things just happen on their own.
What I love about this method is that it removes the need for decision-making. I don’t know about you but, by the time this has happened, the last thing on my mind besides more decisions to make. It means one less thing to fret over when my savings are on autopilot. It’s almost like paying yourself first, and it feels great.
When I set this up for the first time, I took baby steps. All I did was make sure that $50 went from my bank account to my savings account in a month. That wasn’t much but at least it was a start. With time, however, this amount increased as I got more comfortable with what was available in my budget. Consequently now I save $200 monthly without having to think of it and it quickly adds up. Consistency is key. Small amounts compound into large ones over time due to compounding interest law even if they are tiny sums at inception or as they grow with time.
Interest paid on interest is compound interest. Interest is earned from saving money in a bank account. You can also save the interest paid, and as a result you will start earning from these accumulated interests too. It is like rolling snow, the longer you save, the more your money grows.
Automating my savings has also helped me build an emergency fund. Having an emergency fund means I’m prepared for unexpected expenses such as car repairs or medical bills. Knowing that I have some financial cushion helps me to be calm. This means that if something unexpected occurs, it won’t necessarily lead to debts through credit cards and borrowing.
In addition, another merit of automating your savings is that it helps you achieve your financial goals faster. Is it that you are saving for a holiday, a new car or just enough amount of money to cover the down payment on a house? Then this money must be deposited automatically so as to make it there faster. Saving can slip away from you as daily expenses erode into your savings, though not with automation since that money is gone before you have seen it.
To end with, one of my best financial decisions has been automating my savings. It’s an easy process and effective approach which doesn’t bring any stress. I do not need to think about saving: it just happens. To improve your financial health, I would highly suggest trying this out. Begin small and let the money accumulate slowly but surely.