Having trouble saving money? Here is a tip that should help

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It’s an easy step that could really grow your savings.


Key points

  • Saving money is hard, even when you stick to a budget and put in the effort.
  • By pouring money into your savings at the beginning of the month, you get closer to your goals.

Does it seem like no matter how hard you try or how many little luxuries you give up, you just can’t save enough money? It happens to the best of us. And while setting a budget can certainly help, even that may not help you reach your savings goals.

If you’re tired of struggling with savings, there’s a solution worth investigating – and it could end up making a huge difference to your finances.

Put your savings on autopilot

It’s hard to spend money you can’t see or get your hands on. Thus, if you set up an automatic transfer to your savings which is carried out every month, you are sure to respect your objective.

There are different ways to automate your savings. If your goal is to build an emergency fund, you can set up an automatic transfer from your checking account to your savings account. Then, as each paycheck comes in, a portion will be transferred to savings before you have a chance to access that money. The result? Forced savings, which is actually a good thing.

If you’re ready to save for the short term and are more focused on building up a retirement nest egg (which, to be clear, you’ll need when you’re older), you can set up an automatic transfer of your checking account to your IRA. Although not all IRA accounts offer this option, many do.

If you have a 401(k) plan through your employer for retirement savings purposes, this will also allow you to automate your savings. With a 401(k), you simply tell your payroll department how much you want to withdraw from your earnings to fund that account. From there, these deductions will be made automatically so that the paycheck that hits your checking account each month does not represent your total earnings, but rather your earnings minus your 401(k) contributions.

The benefits of automating your savings

Automating your savings takes the temptation to spend out of the equation. Imagine not automating your savings and instead telling yourself that you are going to transfer $200 into your IRA at the end of each month. Well, if social projects tempt you, you might spend more than you planned, to the point of not having that $200 at the end of the month.

With an automatic transfer, you don’t have this option. Instead, that $200 leaves your account at the start of the month (or whenever you get paid), so you can’t spend it.

If you are a truly disciplined saver, you may not need to put the process on autopilot. But if you’re struggling to meet your savings goals, automating the process is a great bet. It also saves you from having to think about writing a check to your IRA or moving money around. It’s a worthwhile thing to do for the convenience factor alone.

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