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 concept— that you can “set it and forget it” and adjust to money going directly into savings would work for ANY savings goal you have— including saving for an emergency fund, homeownership, education, or even a vacation.
How to Save Automatically
Automatic savings means you have a process in place to save at regular intervals, whether that’s monthly, weekly, or daily. There are two modes to save automatically: digital and analog.
If you want to save automatically, we suggest one of these three strategies:
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 employer’s direct deposit, ask your HR representative for more details and set this up today.
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.
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 vehicle. We particularly recommend this method for people with inconsistent income or those who access their pay frequently. Consider picking a lower dollar amount or a time of the month when many other automatic payments aren’t happening. Set this up with your bank or credit union.
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 Don’t Have Enough Money to Save
If you’re still in the portion of your savings journey where you’re reducing debt (which is saving), then visit our resources to get out of debt.
Once you’ve reduced your debt, everyone has the ability to start to save up. At America Saves, we say “Start Small, Think Big.” 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.