The Power of an Automatic Savings Plan
Saving money consistently can be challenging, especially when life gets busy. If you’ve ever found yourself struggling to put aside money for your future, you’re not alone. Nearly half of Americans say they would not be able to afford an emergency expense. Fortunately, there’s an easy way to make saving easier and more effective: an automatic savings plan.
What Is an Automatic Savings Plan?
An automatic savings plan is a financial strategy where you set up automatic transfers of a predetermined amount of money from your checking account to your savings account at regular intervals. This could be daily, weekly, or monthly, depending on your preference and financial situation. Essentially, it allows you to pay yourself first, without needing to remember to make transfers manually.
How Do Automatic Savings Plans Work?
Most financial institutions, including Service Credit Union, allow you to set up transfers from one account to another using online banking. Here’s how you can get started:
First, determine your savings goals. Decide how much money you want to save and how often. This could be for an emergency fund, a vacation or a long-term goal such as a home purchase. One popular budgeting rule suggests allocating 50% of your income to needs, 30% to wants and 20% to savings. If you’re on a tight budget, you may want to put aside 10% to 15%. Even the smallest bit counts!
Next, log into your online banking account or visit your credit union to set up automatic transfers. Specify the amount to be transferred and the frequency. For example, you might choose to transfer $50 every week or $200 each month. (If you have the Service CU mobile app, get started by tapping “Move Money” in the bottom navigation menu. Then, select “Transfer Money” and use the “Schedule” tab to select “Schedule a Transfer” and complete the requested fields, including Frequency.)
Keep an eye on your savings progress. You can adjust the amount and frequency of transfers as needed, depending on your financial situation and goals.
Benefits of Automatic Savings
Automating your savings ensures that money is regularly put aside without requiring ongoing effort or willpower. This helps to build a savings habit and ensures that you’re consistently working towards your financial goals.
Automating your savings can also help reduce temptation: your money is transferred before you have a chance to spend it. This can help prevent dipping into your savings for non-essential purchases, leading to stronger financial discipline.
Over time, regular deposits made through automatic savings can significantly boost your financial cushion. By making small, consistent contributions, you can accumulate substantial savings without a major impact on your daily budget.
Plus, managing your finances becomes much easier when you automate savings. You don’t need to remember to make transfers manually or worry about forgetting to save. It’s a “set it and forget it” approach that helps your savings grow steadily.
Why Is Automatic Savings Important?
Automating your savings helps you develop a savings habit that contributes to long-term financial health. By treating savings as a non-negotiable expense, you prioritize your financial future and build a safety net for unexpected expenses. Additionally, automatic savings reduce the stress of managing your finances and ensure that you’re making steady progress towards your goals.
Take control of your financial future today by setting up automatic transfers to your Service Credit Unions savings account.
