Automating your savings is one of the best ways to ensure you get your money into savings. By automating the process, you take yourself out of the equation as the middleman. You don’t have to remember to do anything with your money and reduce the chances that you would take the money to spend elsewhere rather than make the deposit.
Here is a simple step by step guide to automating your savings so you can essentially set it and forget it:
Step One – Compute Your Budget
The only way to know how much you can distribute into savings and when is by calculating your budget. Without a budget, you will not know how much you can afford to put into savings with each paycheck. Never guess how much you should put into savings, figure it out first.
Step Two – Map Out Savings
Most consumers have more than one savings account so it is important to assess your savings needs. Consider an emergency account, vacation accounts, retirement accounts, and whatever other savings fund you should establish and contribute to on a regular basis. You can change amounts in time but establish a schedule for yourself to keep on track.
Step Three – Consolidate Account Information
There are many choices today for savings vehicles. If you do not have an accurate list of where you have savings accounts, now is the time to do it. Make a master list of the bank or facility name, contact information, and account numbers. You will need this information later but it is also a wise way to stay organized rather than have forgotten or lost accounts.
Step Four – Schedule Appointment with Human Resources
Once you have the insight into how much money goes where, it is time to set up an appointment with your human resource representative or payroll department to get the wheels in motion. Most employers offer automated depositing from paychecks. You will need to provide HR with the bank information as well as the amount you want to have direct deposited from each pay.
Step Five – Research Alternatives
If you are self-employed or work with an employer that does not allow automated savings deposits, you should research an alternative savings account where you can deposit the total sum of your savings for each paycheck into one bank account. You can then use the online banking options to automate withdrawals to your various savings accounts. You will have to remember to make the deposit each week or month but you can automate the percentages to your different savings vehicles.
Step Six – Schedule a Six Month Review
Every six months you should review your financials including automated savings. If you have received a raise or your financial situation has changed in any capacity, make sure you make the appropriate changes to your savings plan. With your financials mapped out, it should be easy to implement the changes on a regular basis. By keeping up with reviews of your savings and budget throughout the year, you will be very in touch with your savings goals and be more inclined to reach them.