Saving Without Thinking - Why You Should Automate Your Savings (and Bills)
Saving money is Hard. There, I said it. Sure, we have Online Banking, savings apps, jars, mattresses, squirrel funds, etc, but let’s be honest here. Saving money is HARD. It’s hard when you’re broke, it’s hard when you’re not broke, and it’s even harder when you have the money to burn but you also have financial goals and things you’re saving for that matter to you. I’m going to share with you some tricks I’ve used to help me break a couple of mindsets and conquer a financial milestone. Automating my savings.
Why automate? Because it removes the “you” factor from the equation once you’ve set it up. Your only goal after setting up the automation is to have the personal discipline to ignore it long enough to reach your savings goal. Or see it gain interest. Or both. I was really fond of my bank paying me for keeping my cash with them, but your mileage may vary. This is a 5-Step Process. Read below to find out more!
Step 1: Open a Separate Savings Account
I can hear you already. “But I already have one open!”
Do it anyway. That account has been You-Comprised. So we’re starting out with a Fresh new account. If it needs $50 to open it, you are going to move that $50 over to it. Because with a fresh new account comes a fresh new goal. It helps that this is also a certain Financial Guru’s Baby Step #1: $1,000 to start an Emergency Fund.
You also need to promise yourself to not touch this account. This one is strictly to save your funds. If any money comes out of it, it’s you moving it to another bank’s saving account (what I’m doing with my own).
2023 Update: Open up several accounts. I now have four.
Step 2: Start Small: Find an Amount You Won’t Miss
Well, yes, you’re going to miss it for the first few paychecks. But then you’ll find that you can skip that $6 latte (I live in Seattle) and just take your own mochas out with you in a travel mug. You’ll make a game to see what you can give up and suddenly that amount you set up to start saving each month is no longer missed. I started with $50, this will later be updated to $100 per month in additional to Qapital’s scrapes.
Step 3: Step up an Internal Transfer
Go sign into your Online Banking account. You’re going to set up an internal transfer from your checking to your savings account. I started with one transfer going out at the 1st of the month. So once my paycheck hit my account, that money was already gone. I didn’t even see it go unless I signed into the account itself. You can choose the dates that work for you, but you do have to choose them.
Step 4: Observe and Modify
We wait. I waited a couple of months before I added my second transfer because I’m paid twice a month. So I bumped up the amount of the first transfer to $100 and this one I started at $50.
Step 5: Stop Thinking About It
Ignore that account until the amount on it reads over $1,000. If I received a bonus from my Insurance, I sent it to Savings. If I received a bonus from work, the same story went to that Savings account because it helped me achieve Step 1 that much faster.
Once you’ve completed Steps 1 - 5, you can celebrate!
Congratulations! You’ve taken an awesome and huge step toward conquering a financial goal by automating your savings.
Feels good, doesn’t it?
You Mentioned a Certain Financial Guru
2023 Max here. The financial situation has changed so much since 2019 that I can’t even take this post seriously anymore. Dave Ramsey can take a short walk off a tall cliff at this point. There was more to this post, but I in good faith, and because 2019 Max really did believe this, I deleted the rest.
