Money Tip #3: Automate Your Savings (So You Don’t Have To Think About It!)

We’ve all been there. You intend to save, you really do! You promise yourself that this month, you’ll finally put away that extra $100. But then, life happens. Unexpected expenses pop up, tempting sales beckon, and before you know it, the month is over, and your savings account is still looking lonely.

That’s where Tip #3 of the 20 money tips I wish I knew in my 20s comes in: Automate Your Savings. It’s a game-changer, and it’s remarkably simple.

See, relying solely on willpower to save money is like trying to climb a slippery slope. You’re constantly battling your own impulses and the allure of instant gratification. Automating your savings, on the other hand, transforms saving from a conscious decision to a passive action. It’s like having a tiny, diligent robot that tirelessly transfers money to your savings account without you having to lift a finger (or think about it too much!).

Why is Automation So Effective?

• “Pay Yourself First” Mentality: By automating your savings, you’re essentially prioritizing yourself. The money is transferred before you have a chance to spend it on something else. You’re ensuring that you’re investing in your future before you even have a chance to feel tempted.
• Removes the Emotion: Saving money often feels like a sacrifice. You’re foregoing something you want now for something you want later. Automation takes the emotion out of the equation. It’s no longer a question of “should I save?” but a simple, automatic transfer.
• Consistent Progress, Even Small Amounts: You don’t need to start with a huge sum. Even automating small amounts – $25, $50, or whatever you can realistically afford – can make a significant difference over time. The power of compounding is real, and consistent contributions, no matter how small, will accumulate over time.
• Makes Budgeting Easier: Knowing that a certain amount is automatically being saved each month makes budgeting easier. You can plan the rest of your expenses around your automated savings contribution, knowing that you’re consistently building your financial security.

How to Automate Your Savings:

1. Set Up Regular Transfers: Most banks allow you to set up recurring transfers from your checking account to your savings account. Choose a frequency that works for you – weekly, bi-weekly, or monthly – and a specific amount.
2. Utilize Employer-Sponsored Retirement Plans: If your employer offers a 401(k) or similar retirement plan, take advantage of it! Contribute at least enough to get the employer match (that’s free money!). The contributions are automatically deducted from your paycheck, making saving for retirement incredibly easy.
3. Explore Savings Apps and Platforms: There are numerous apps and platforms designed to automate savings, often using algorithms to identify small amounts of money you can afford to save without noticing. Some even round up your purchases to the nearest dollar and deposit the difference into your savings account.
4. Review and Adjust Regularly: Life changes, and so should your savings strategy. Periodically review your automated transfers to ensure they still align with your financial goals and adjust the amounts as needed.

Don’t Underestimate the Power of Automation:

In your 20s, building healthy financial habits is crucial. Automating your savings is a simple yet incredibly effective way to cultivate those habits. It’s a small change that can lead to significant long-term financial success. So, stop relying on willpower alone and start automating your way to a brighter financial future! Your future self will thank you.

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