Automate Your Savings

Automate your savings summary: 

• Automated savings lets you pay yourself first by moving money from your checking account to a savings account when you get paid. 

• You can automate savings through your bank, with a schedule and savings amount that fit your budget. 

• Saving automatically could help you work toward your big or small financial goals. 

Automate your savings definition and meaning

Automatic transfers let you move money from one bank account to another regularly without needing to do it manually each time. You could automate your savings so that when you get paid, part of your check goes straight to your savings account. 

Saving automatically means you pay yourself first, before you spend any money or pay bills. If you want to save for emergencies or other financial goals, automating your savings could be a stress-free way to do it. You decide how much to save and how often, and the bank does the rest. 

Key concept: Automatic movements of money from checking to savings on a regular basis. 

More on automate your savings

Saving money makes a difference financially, and it could give you a mental boost, too. Watching the balance in your savings account go up month after month feels so good. When an emergency hits or you want to take a vacation, you can feel confident knowing that you have cash to cover it. 

The challenge is making sure money makes it into your savings account when you get paid. You could make things easier when you automate your savings. 

Automate your savings: a comprehensive breakdown

Automatic transfers let you move money from one bank account to another without needing to manually initiate a transfer each time. When you automate savings, you set up a regular transfer from checking to savings. 

There are two ways to automate your savings: 

• Set it up through your bank

• Set it up through your employer if you get paid by direct deposit

Most banks offer an automated savings feature. You just log in through online or mobile banking and navigate to that part of the menu. Once there, you choose the schedule and the amount you want to transfer. 

For example, say you get paid on the 1st and 15th every month, you can transfer money on those dates. Or you could do a once-monthly transfer, or biweekly—whatever works best for you. 

If you get paid through direct deposit, you could ask your employer to send some of your paychecks to savings automatically. You'll need to fill out a direct deposit form and share your bank account details. You'll also specify on the form what percentage or dollar amount from your checks should go to savings. 

Benefits of automating your savings

Saving money is a healthy financial habit. It's often easier to get used to saving when you do it automatically. 

Here are the potential benefits of automated saving:

• Automatic transfers mean you can save without thinking about it. 

• You could be less likely to spend the extra money in your budget, since it automatically goes to savings. 

• It's rewarding to watch your balance grow, which could motivate you to stick with your savings plan. 

• Automatic transfers can help you save for a variety of financial goals. 

You could automate your savings to build a rainy day fund, set aside money for new furniture, or even plan for retirement. If you have a Roth IRA, for example, you could set up a monthly contribution to grow wealth automatically. 

Real-life example of automating your savings 

If you've never tried automatic savings, here's what it might look like for you. 

Let's say you make $5,000 a month. You follow the 50/30/20 budget method, which has you put 20% of your pay toward savings and debt each month. 

Since you have some credit cards you're trying to pay down, you decide to save 10% of your paychecks, or $500 a month. You get paid biweekly, so you decide to set up a transfer of $250 every other week. 

You log in to your bank account and navigate to the transfer menu. You choose the frequency and dollar amount, hit submit and you're all set!

After one year of $250 biweekly transfers, you could have $6,500 in savings. If your income changes, you switch jobs, or you need a temporary break from saving because of a financial hardship, you can adjust your automatic savings plan as needed.