By Amy Miller, AFC®

The Power of Saving Automatically

Automatic savings is a simple yet powerful tool that ensures you’re consistently working toward your financial goals, whether paying down debt, preparing for emergencies, or saving for long-term dreams.

 

Let’s explore how automatic savings can help you prioritize your past, present, and future financial needs: 

Save for the Past: Tackling Debt Consistently 

We believe that paying down debt is saving! It’s the first step toward financial freedom for many of us. Setting up automatic payments for loans or credit cards ensures that payments are made on time, helping you avoid late fees and reduce your overall balance. 

Take, for example, someone dealing with credit card debt after an unexpected car repair. By setting up automatic payments that allocated a percentage of their monthly savings goal to debt repayment, they were able to reduce their debt by $5,000 in just two years. 

This approach works because it removes the need to think about payments every month, allowing you to focus on other priorities while making steady progress. Automating your debt repayment makes it easier to stay consistent and stress-free. 

Practical Step: Set up automatic payments with your lender to ensure debt repayment stays on track. Start with as much as possible at the moment and adjust as your financial situation improves.  

Save for the Present: Building an Emergency Fund 

Life is unpredictable, and having an emergency fund is key to financial peace of mind. Automating your contributions to a savings account ensures you’re consistently setting money aside for unexpected expenses. 

For instance, imagine someone who earns an irregular income but decides to set up an automatic transfer of just $10 a week to an emergency fund. Over the course of a year, they’ve saved $520—enough to handle unexpected expenses like a car repair or medical bill without turning to credit cards. Even with a modest amount, the consistency of automatic transfers ensures their savings steadily grow, providing peace of mind and financial stability.  

Practical Step: Open a savings account and set up a recurring transfer - even small amounts, like $10 or $20 a week, can add up over time. (remember, start small - think BIG!)  

Save for the Future: Securing Long-Term Goals 

Whether you’re preparing for retirement, saving for a down payment on a home, or planning for your child’s education, automatic savings helps you stay committed to those long-term goals. 

Consider a couple wanting to buy their first home. By setting up automatic deposits into a joint savings account and allocating a portion of their savings goal to this effort consistently, they were able to save   enough for a down payment and cover their moving expenses in just three years.  

Automating their savings made it easier to stay on track, even during months with unexpected expenses. Watching their savings grow provided the motivation to stick to their plan and achieve their dream of homeownership. 

Practical Step: Check if your employer offers a split direct deposit option. Allocate part of your monthly savings to a retirement account (like an employer sponsored 401K or an IRA), house fund, or another long-term savings account, ensuring consistent progress toward your future.

Why Saving Automatically Works 

Automatic savings simplifies the process of building financial security. Here’s why it’s so effective: 

  • Consistency: Regular contributions build habits and ensure progress toward goals. 
  • Discipline: Automation removes the temptation to spend money before saving. 
  • Convenience: Once set up, saving happens effortlessly. 

Take Action: How to Set Up Automatic Savings 

Ready to harness the power of automatic savings? Here’s how to get started: 

Identify Your Goals: 

Are you paying off debt, building an emergency fund, or saving for retirement?

Choose Your Savings Method: 

Bank Transfers: Set up recurring transfers to an emergency fund savings account and any debts you’re repaying.  

Employer Direct Deposit: Ask your employer to split your paycheck between checking and savings. 

Retirement Contributions: Enroll in your employer’s retirement plan or set up an IRA with automatic contributions. 

Start Small and Scale Up: 

If you’re unsure where to start, begin with as little as $10 a week. Even on a tight budget, small amounts saved regularly add up. Automated transfers make saving predictable and consistent, keeping your financial goals moving forward without needing constant attention. Adjust as your financial situation improves. 

Track Your Progress: 

Regularly check your accounts to celebrate milestones and stay motivated. 

Start Saving Automatically Today 

Automatic savings is the easiest and most effective way to build a solid financial foundation. Whether you’re addressing your past, securing your present, or planning for your future, automation ensures you’re always moving closer to your goals. 

Take the first step today – Learn more about setting up automatic savings and get our 3 step guide here. Your future self will thank you! 

_____________________

Join the Movement: 
Take the America Saves Pledge and commit to saving automatically. Let’s make 2025 the year you achieve your financial goals! 

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