3 Reasons to Set Up an Automatic Savings Plan
There are endless strategies for saving money, but one that comes up again and again is setting up an automatic transfer. Lots of research, including our research here at SaverLife, shows that this is a good way to save more. In fact, SaverLife members who set up automatic savings transfers are 5-6% more likely to save at least $20/month.
Are you on the fence about setting up an automatic savings transfer? Here are some reasons we think you should give it a try:
1. Save without thinking about it
We all lead hectic lives. It’s hard to manage many competing priorities – so why not take one thing off your to-do list? By automating your savings, it happens without any effort. Many Savers tell us they set up a small automatic transfer and actually forgot about. Then, months later, they were shocked to see how much money they’d build up so easily.
2. Make saving a habit
At SaverLife, we like to say that saving is a behavior, not a balance. Even if you’re not able to save as much as you’d like, putting money away every month helps establish a habit of saving.
3. Have a separate savings account to manage your money
Everyone wants to save more, but if you keep money in a single account, it can be hard to compartmentalize which money you’re saving. By separating out a little bit of money every week or month, you’ll be able to visually see how much money you have for spending.
But be careful!
Many people are concerned about setting up an automatic transfer because they worry they will incur overdraft fees. This is an important concern. One option is to turn off overdraft protection, so that if you try to withdraw more than you have in your checking account, the transaction is denied instead of hitting you with an overdraft fee.
But for some people, automatic savings transfers may just not be the right way to save – and that’s great too! We want you to find a system that works for you.
Julia is part of EARN’s Research and Innovation Team. If you join SaverLife, you may get emails from Julia asking you to help with our research. These are always optional (and you can unsubscribe at any time), but your voice helps us improve SaverLife and understand how we can better serve our members.