When Should Automate Your Savings?

For most of us, saving money alone is often painful enough — how much more if we have to remember it every time we get our income?

The very beginning is where most of us go wrong. As soon as we see those numbers hit our bank account, we’re immediately thinking of how to spend it. And most of the time, savings is the last thing we think about.

But there’s a solution: automation. The wonders of modern banking make it so that we never have to see the money deducted from our bank account, so we never even think of using it. In this article, we’re going to talk all about automating your savings.

The Benefits of Automating Your Savings

Whatever your financial goal is, experts suggest that one of the best ways to achieve it is to make saving automatic. This is because this move presents a lot of great financial benefits.

First, it lessens your mental burden. Have you ever felt that saving was a hassle? You might think that it’s unlikely to happen — after all, it only takes a few clicks or taps on the phone. However, people could very easily postpone depositing. After all, it’s if it only takes a second; you might as well just do it later. But as we all know, procrastination never ends well.

Second, automation eliminates the temptation to spend. After all, at the end of a long workday, it’s tempting to take just a little bit off of our planned savings account just to reward ourselves. When spending is just as easy and more rewarding than saving, we often err on the side of short-term gains.

Automation solves all of these. If you automate your savings, you won’t even get the chance to think about spending it, as you won’t see the amount reflected on your account. This method solves both problems and makes saving much more effortless.

When Should You Automate Your Savings?

Automation is an essential economic and mental tool that will set you up for productive, life-long habits if you’re still starting your financial independence journey. You can easily incorporate automation to save for an emergency fund, pay off debt, invest in financial assets, or save for your retirement, and it will pay off over time.

When setting up a bank account for an emergency fund or retirement savings account beyond your 401(k), ensure that you get the highest interest rates. Some banks have minimal interest rates, and you can gain more income if you choose wisely. After all, your money will be sitting there for some time.

Investment accounts, such as stocks, bonds, or mutual funds, also have an option for automated savings. However, you might sometimes need to allocate the funds yourself once it reaches the trading account.

However, if you’ve built up the habit of saving, automation might hold you back. If you want to achieve extremes, such as paying off a $50k student debt, you want to put all the benjamins you can while still being flexible, which you can’t do with automation.

Taking Control of Your Financial Goals With Automation

Saving is a big part of our financial life, both financially and psychologically. You need to build up a solid habit of saving, which is arguably the greatest benefit of automation. With it, you get used to the idea that you can’t spend all of your income at once.

However, once you have this habit down, automation might not be the best option for you anymore. This is especially true if you want to achieve extreme goals with your newfound habit, such as saving a big amount in a short time where you will have to allocate a varying amount of money every month.