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If you want to be consistent with your savings contributions when you automate your finances, start small and then increase the deposit amount when you feel confident that you can set aside more. Always be sure to keep tabs on any minimum balance requirements, and look for ways to avoid bank fees. Account fees can eat into your savings goals, so it’s best to use accounts that don’t have monthly maintenance fees, like some online savings accounts. “These are sometimes waived if you keep a minimum balance in your savings account,” she adds. When picking an account for your automated savings, Harzog says to keep fees, including one charged for monthly maintenance, top-of-mind. If your employer offers direct deposit, you can avoid a pit stop in checking and have a portion of your paycheck deposited directly into your savings account. If you already have a bank and want to automate your finances, you can simply set up an automatic deposit for your savings account from a checking account or other deposit account. “Once you have a grasp of your own finances you can decide how aggressive you want to be with your savings goal,” he adds. It all starts with setting a realistic savings goal by calculating how much you can reasonably afford to save each month, Ouyang says. There are several ways to automate your savings. The automatic deposit will help you stay on track, making it easier for you to pay off debts quickly so you don’t incur too much interest.
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Then you can pay these expenses off in one lump sum when you’ve built up enough funds. If you’re determined to pay off student loans, credit card balances and other debts this year, you could automate your savings into an account specifically for your debt.
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Automation gives you peace of mind that your savings are growing steadily with little to no effort on your part. Turning your savings contributions into a recurring monthly expense means you don’t have to keep thinking about how much you should save, when to make the deposit or transfer and whether you will meet your savings goals by the end of the quarter or year.
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Save time: One of the biggest benefits of automating your savings is that it will free up time, Harzog says.Not sold yet? Some other benefits of automating your savings include: “It’s like making a commitment to building an emergency fund.” “Having it automated makes sure that you don’t forget to make the deposit into your savings account,” she says. When you automate your savings, it’s easier to ‘pay yourself first’ when that paycheck comes in, explains Beverly Harzog, credit card expert and author of The Debt Escape Plan. This can help you prioritize your savings contributions, reducing the temptation to spend those funds without planning ahead. Benefits of automating your savingsĪutomating your savings can turn your savings deposits into another monthly expense. If you fall into this camp, now may be just the time to automate your savings. The challenge here is that you likely won’t have a consistent amount being deposited into your savings account every paycheck, which means your savings contributions will be… at best …fairly unpredictable. Many people fall into the habit of saving only what is left over after paying their living expenses and covering the cost of discretionary purchases. Whether you get paid every two weeks or on a monthly basis, you may have a hard time regularly setting aside money for a savings account or even a retirement fund. Automating your savings could be just what you need to get your finances in tip-top shape to ensure you reach your savings goals.
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But that doesn’t mean you can’t get ahead of the savings game. It’s easy to get off track and save less than you intended when you’re not consistently saving a portion of every paycheck. Saving money may not feel like your strong suit.