...in celebration of America Saves Week and our commitment to help members save, we have been given permission to share the following blog post.
7 Ways to Automate Your Savings
By Meg Favreau, Senior
Editor of Wise Bread
Anybody who has ditched plans to eat a salad to scarf down a
plate of nachos instead (like I did, um, yesterday) can tell you that even
though we humans usually know what’s best for us, it’s sometimes difficult to
actually do the right thing.
This is especially true when it comes to saving money -- for
emergencies, for retirement, or for almost anything else. But there is some
good news. Studies show that once we do set money aside, we’re likely to leave
it there. So how do we get ourselves to save in the first place? By automating!
Here are six easy ways to do just that.
1. Sign Up for Your Company’s Retirement Plan
If your company offers a 401(k)
or 403(b), this is one of the best options for automatic savings. Not only
do these retirement plans automatically put money you earn into a retirement
account before you have the opportunity to spend it, but most employers offer a
contribution match. That means that for every dollar you contribute (up to a
certain amount), or employer will deposit an equal amount into your account.
That’s essentially free money, and it’s one of the biggest benefits you can get
at a job. Take advantage of it.
2. Split Your Direct Deposit
If you have direct deposit, most employers will allow you to
split your check between multiple accounts -- so, instead of depositing all of
your money into your checking account, you can set some to automatically go
into savings.
3. Set Up a Regular Deposit to Savings
Even if you don’t have direct deposit, many banks will allow
you to set up regular automatic deductions. For example, I have a checking
account with a traditional bank, and I have a savings account with an online
bank. I can set my savings account to automatically deduct from my checking
account on every payday. The effect is the same as splitting a direct deposit
-- the money is in my savings account before I even know it’s gone.
4. Pledge to Save Certain Cash
You’re
probably most familiar with this concept in the form of a piggy bank-- at the
end of the day, many people automatically put the change in their pockets into
a jar, often to save for a specific goal, like a vacation. But there’s no rule
saying that you have to stick to coins. Instead, pledge to set aside every $5
bill that comes your way -- or even every $10. This is a great way to reach
medium-term savings goals, like buying new furniture.
5. Use a Cash-Back Credit Card
You
should only follow this suggestion if you’re able to pay your credit card off
in full every month and you won’t let credit card rewards and 0% balance
transfer offers become an excuse
for spending more than you normally would. If you fit this criteria, start
making your purchases on a cash-back credit card. Then, at the end of every
month, deposit that cash back directly into your savings.
6. Automate Your Bills
Most utilities, businesses, and even lenders now allow you
to set up automatic payments. There are two ways that this helps automate
savings. First of all, automatic payments ensure that you pay your bills on
time, saving you from late fees and possible dings to your credit. Secondly,
sometimes you can get a discount for paying automatically -- for example, some
cell phone providers will knock $5 off of your monthly bill if you sign up for
the automated system. If you do begin paying automatically, just make sure to
check your billing statements regularly to ensure there aren’t any mistakes and
you’re not being charged for services you aren’t using.
7. Sign Up for Your Financial Institution’s
Round Up Program
What if you could make yourself save a little bit every time
you make a purchase? Several banks and credit unions offer “round up” programs
that do just that. Every time you use a credit or debit card registered with
the program, your financial institution will automatically deposit the
remainder of your change into a savings account. To get started, ask your bank
or credit union if they offer this benefit. (Note from Destinations Credit Union -- with a free Kasasa Rewards checking, your cash back or interest earned can be automatically transferred to a high-yield savings account!)
How do you automate your savings? Share your
favorite money-saving tips for America
Saves Week – an annual celebration of good savings behavior and
financial responsibility.
Meg Favreau is the Senior Editor of money-saving blog Wise Bread — an award-winning website dedicated to help you live large on a small budget.
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