Do you sometimes find it challenging to save money? If you've set a savings goal, but your account balance never seems to increase, you may need to try a different approach. If you transfer your money to your savings account manually each month, you may forget to make the transfer or not transfer it at all. If this sounds like your situation, then setting up automated transfers can be the solution to achieving your savings goals.
Create Automatic Transfers to Savings
There are several ways to transfer money into your savings account automatically. The first way is to directly deposit the funds from your paycheck into your savings account. This is one of the easiest ways to save automatically. You can contact your HR or payroll department to get the proper forms or complete them within minutes online. The second way to automate your savings is to set up an automatic transfer from your checking account to your savings account. Many banks offer the option to set up automatic transfers weekly, semi-monthly, or monthly depending on your preference. An essential tip is to have your automatic transfer occur when you get paid to reduce the temptation to spend the money sitting in your checking account.
Saving and Investing Pay Increases
When you receive a pay increase or a bonus, don't let lifestyle creep get in the way. Lifestyle creep happens when you continually increase your standard of living based on the pay increases you receive. If you could manage your household finances before receiving your pay increase, allocating a portion of those funds into your savings can help you achieve your future goals.
See my feature in How Lifestyle Creep Impacts Your Family Budget—and How to Avoid It.
Do you have a 401(k) account or another type of retirement account with your employer? If so, you can also increase your retirement contributions based on your pay increase. Investing an additional one percent annually into your retirement account can reduce your tax rate and help you build a solid retirement future.
See my feature in How To Make Yourself A Retirement Millionaire.
Three Ways To Plan For Retirement
Track Your Savings Goals
Once you set up automatic savings, tracking your savings goals is essential. If you are saving for a short-term or long-term goal, keeping track of where you are in your achievement plan is necessary. A savings tracker can help keep you motivated and let you know where you are or what you need to change to achieve your goal on schedule or faster. Whether you're saving for a rainy day, a new car, or a deposit on an apartment, automatically saving your money and keeping track of your goals can help you avoid financial turmoil in the future.