Although we understand how important it is to save money, the demands of daily life can make it difficult to save consistently.
With the help of automated transfers, technology can assist you in achieving your financial goals by enhancing your savings effortlessly. Various banks that offer online banking also provide features of automatic transfers. Alternatively, you may connect your bank account to a savings app to access this feature.
Here are five methods for using automatic transfers to ensure that your savings keep increasing, even when life gets busy.
1. Direct deposit split
To start saving automatically, you can use a direct deposit split. This means setting up a portion of your paycheck to be deposited directly into a savings account before the rest goes into your checking account.
You can choose a specific percentage or amount to be sent to a savings account from each direct deposit you receive. For instance, if you earn a $3,000 paycheck, you can choose to transfer 10 percent ($300) to the savings account.
2. Recurring savings transfers
You can set up automatic transfers for your bank account on a weekly, biweekly, or monthly basis. You have the flexibility to customize the transfers according to your budget and savings goals.
One way to make sure you save money consistently is by setting up an automatic transfer that aligns with your payday. You can schedule a transfer of a specific amount, say $100, from your checking account to your savings account every payday.
3. Round-up savings
With round-up savings programs, you can choose to have your debit card purchases automatically rounded up to the nearest dollar amount or a custom amount. The resulting difference between the purchase price and the rounded-up amount is then deposited into your savings account.
For instance, at Ally Bank, any change you have is rounded up and then moved to a savings account automatically once it reaches a minimum of $5.
4. Goal-based transfers
To ensure your savings match your specific objectives, you can create automatic transfers that are customized for each savings goal. These goals may include building an emergency fund, saving for a house down payment, or financing your child’s education.
It’s a good idea to have separate savings accounts for different goals. However, you can also create categories or “buckets” within a single savings account to organize your savings. Simply decide how much you want to save for each goal and set up automatic transfers to each category. This helps you track your progress toward each goal.
Huntington Bank offers the Savings Goal Getter as an automatic savings tool that operates based on savings goals. Customers can establish different savings goals with recommended amounts to add on a regular basis.
5. Investing spare change
There are mobile apps that enable you to invest small amounts of money, which is known as “micro-investing.” By connecting these apps to your checking account, they can monitor your transactions and round up each purchase to the nearest dollar. The difference is then invested in a varied portfolio.
Investing in options that diversify your funds across multiple securities (like stocks and bonds) can help lower risk. However, it’s important to keep in mind that while this strategy can reduce risk to some extent, market fluctuations can still impact the value of your investments.
Some investing apps like Acorns, Stash, and Betterment provide automated micro-investing capabilities.
Bottom line
Adding automated transfers to your financial routine can make a significant difference in saving money consistently. Consistently saving is important for achieving financial stability, long-term goals, and protecting your finances during a potential recession. Having technology handle your savings can make it easier.
Make sure to research savings accounts that offer digital features that interest you and ensure that you are earning a competitive savings yield to help your money grow.