Today’s money hack is related to saving money.
Many people struggle with the idea of saving money. A shocking statistic revealed by a survey by Bankrate shows that around 20% of Americans fail to save altogether (Source: CNN Money). Sometimes it’s because consumers do not earn enough and sometimes it is because they fail to manage their incomes properly and simply forget to set money aside as part of a savings deposit.
Well, it’s simple – the easiest and fastest way to save money is to automate the saving process, so you can do away with the hassle of remembering to save money every month. This method not only takes the task of actively budgeting your savings, but also helps you earn money through interest payments. In other words, you save and earn money at the same time, and what a wonderful win-win situation that it.
The idea is that as soon as each month’s paycheck arrives, the first thing you do is deposit a portion of it into a savings account. Once you have saved some of your income, maybe 5% or 10%, you can then proceed to cover your monthly expenses out of that paycheck, making sure that you do not collect extra debt in order to cover your expenses, because that would defeat the purpose.
Now let’s get down to how you will ‘automate your savings’. Here are two different ways you can save using this effective money saving technique:
1. Ask payroll to setup a direct deposit scheme for a savings account
Ask the payroll staff at your company to setup a direct deposit scheme for a savings account. Instead of the entire monthly salary being transferred into your current or checking account, a small portion of it is directly deposited into your savings account, or an investment account.
2. Setup an automatic money transfer scheme with your bank to deposit money from your current account into a savings account
These days, online banking platforms offer a wide range of services, such as utility bill payments, mobile phone airtime purchases and automatic money transfers from one account to the other. Using no more than a few clicks, you can quickly setup an automatic saving mechanism where a pre-defined sum of money is deposited from your salary account (checking/current account) into your savings or investment account, at a specified date each month. This financial service is actually a recurring transfer that takes place automatically through the online platform provided by your bank.
Now wasn’t that easy? You no longer have to worry towards the end of each month about not being able to save enough or save at all. In fact, according to Investopedia, automatic savings make it easier to stick to your personal budget and prevent overspending.
Once you start saving money regularly, no matter how little the amount may be, you can begin your journey towards financial independence and be able to setup an emergency fund, or save money for the purchase of a fixed asset (like a house or a car) or even save for your retirement.
It’s never too early or late to start saving, so start now.