When it comes to saving, many of us are familiar with the usual drill: Know how much money you’ve got coming in, how much you have going out, and set some money aside for your goals, whatever they may be (e.g., a nice vacation, paying off debt, retirement, etc.).
Sounds simple enough, right? But it can be challenging to save consistently if you have to actually remember to do it and take the time to move money from one account to another. We all know it can become too easy to just kick the can down the road and say, “I’ll get to that next week” – especially if you’re already juggling several financial priorities.
This is where automating your finances can help.
Many traditional and online banks offer an automatic deposits or transfers feature, allowing you to schedule recurring transfers between accounts – for instance, from your checking account to your savings account (or a retirement account).
Automating your finances is a great way to build your savings without having to remember or force yourself to put a little money away each month. That means one less thing to have to think about.
Some people like to time their automatic transfers based on their pay schedule (or direct deposit from their employer). That way, every time you get paid, you get into the habit of saving a portion of that paycheck without having to think about it. It’s a smart way of “paying yourself first.” You’re essentially funding your savings goal(s) before you have a chance to spend that money on something else.
Sometimes you may have to start small – and that’s OK! When it comes to saving, every bit adds up. Consistency is key. If you stash a little money away each month, say in a high-yield savings account, you’ll be surprised at just how much you could save over time. And that should motivate you to keep going until you hit your goals.
If you’re able to sign up for automatic deposits, you’ll have to decide how much and how often you want to transfer between your designated accounts. Weekly, biweekly or monthly – it’s up to you. How you decide to set up your automatic deposits or transfers will depend on your financial situation and goals. That often means taking a look at your budget and determine how much you could afford to save each month.
Getting started with automating your savings can be pretty straightforward. Some like to describe it as a “set it and forget it” exercise. But while automation can help make saving a little easier, you shouldn’t simply set and forget about your automatic transfers.
It’s a good idea to revisit your savings strategy periodically to see if the amount and frequency of your recurring deposits still make sense for your needs and goals. For example, if you get a raise or a new job with a better salary (yay!), you may be able to save even more for your goals. On the other hand, sometimes you may find yourself having to dial back your savings temporarily. Either way, it’s important to stay on top of your finances and make any adjustments as needed.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs® but may not reflect the institutional opinions of Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.