Saving money for the future and financial emergencies is recommended in every personal finance guide. But putting money away each month isn’t as easy as it sounds.
For many, manually saving money is a task that gets forgotten or the savings get spent, leaving savings goals unattainable. Luckily, automated savings can help.
Automated savings removes the fuss of moving your money around, leaving you with consistent saving results. While this saving tip is great for some, it’s not applicable to everyone. Keep reading to find out how this strategy works and whether it’s right for you.
Automated savings are a personal finance saving method that involves setting up a system that saves a predetermined amount of money on a regular basis.
Once set up, the saver doesn’t need to do anything manually. The system removes the set amount from their current account to their savings every month. This continues until the saver chooses to stop.
Automation is a popular savings tool, as this removes the need to calculate savings each month, leaving you with more time and savings. Most online banking accounts have automated settings, but you can also use savings and budgeting apps to arrange your finances.
Take advantage of this savings hack with these four steps.
Though automated savings work well for some, they’re not an apt tool for everyone. Here are some critical factors to consider before you choose this money management tip.
Firstly, examine your financial goals. Automating your savings can help you save for holidays, down payments and more. However, you need to be realistic about how much you can save each month.
You should also consider your overall income. It’s easier to save a set monthly amount, if you have a regular income. If you don’t have a steady income, ensure you have enough money to cover your monthly expenses before saving.
Another factor to consider is your typical spending habits. Automated savings can help overspenders save money, as the cash is stored in their savings account. If you’re already a diligent saver, automated savings might not make much difference.
Finally, weigh the overall pros and cons of this saving tip before going all-in. See the key points below.
Automated saving is a simple tool that can help you achieve consistent savings. However, as with all personal finance tips, examining the negatives and positives is crucial before adopting the strategy. When in doubt, consult a professional for personal advice.
A Guide to Managing Your Money: Budgeting
A Guide to Managing your Money: Saving for Retirement
Tips for better money management
For more helpful information about how to manage your money, different financial products or what we do at Polar Credit, take a look at our Info Hub.