Automate Savings to Build Good Habits
Automation helps any process or action run smoother and helps remove room for error—like forgetting or making an excuse to not do something or do it differently. And it’s no different for growing your saving account or investment portfolio.
There are dozens of budgeting and financial management apps out there, but Acorns stands out in that it helps you save without you having to think about it—or do any math! By linking your debt and credit cards to the app, it rounds each purchase up to the next highest dollar, automatically depositing the change into a managed investment portfolio based on your risk profile.
If you’ve created a personal budget and have successfully lived within your means for a while, this is an option to start investing and saving in small ways that add up over time. You should keep an eye on your expenses throughout the month while trying out this app to make sure it doesn’t cause you to over spend, but even when you’re ready to make larger, regular deposits into savings, this can be a great way to save more—without thinking about it!
Ideally, a dollar amount to be saved each month should be built into every budget. But how do you decide how much to save each month? A good strategy is to start small with an amount you are confident you can pay each month without trouble. After a few months of successful savings, trying raising that number a little bit. And you can automate this type of saving plan as well. Credit unions offer automatic transfers between accounts and many employers offer automatic deposits from your paycheck into multiple accounts—say a certain percentage into checking and a certain amount into saving.
There are many benefits to using automation to establish a savings habit. Automating saving turns those deposits into another “monthly expense” that you’re more likely to pay. This prioritizes saving and reduces the likelihood you’ll spend those funds on extra comforts. You also won’t forget! It also saves you time and hassle not having to view multiple accounts and manually request fund transfers. And lastly, it supports the saving rule that the more you invest now and consistently, the larger your investment will grow.