Day 5: Automate Your Savings
Posted by LearnVest on February 19, 2010 at 3:42 PM
When it comes to putting aside that extra $50 into your savings account each month, you probably have a million excuses as to why you can’t afford to. But we’re not listening! You simply can’t afford not to.
Most people equate the phrase “saving” with deprivation but saving is really all about spending—it’s just the spending that you’ll be doing down the road in the future, not today. When you’re paying your bills, why not consider your savings to be a bill? Why not pay yourself too?
If you don’t have to think about it, saving becomes a lot easier. Be creative about finding ways to save, and put that extra money straight into the effective savings account that we approved on Day 4. By automatically contributing to your savings account every month, you will start to think of savings as a necessity—it’s not optional!
And remember, when you put money away and label it “savings,” you don’t have to stick it in an impenetrable vault. There are many reasons that you might need to quickly access your savings account in the future. Financial emergencies do happen.
Link your checking account to your savings account online, so that you can easily transfer money between them. You can easily do this even if your accounts are at different banks.
Action Time: 2 minutes
Set up automatic monthly deposits from your checking account into your savings account, for the day after your paycheck hits. By transferring this cash as soon as your paycheck arrives, you won’t even miss it. Make saving an automatic thing, and you don’t have to stress about it.
Action Time: 7 minutes
Understand your savings goal. At the minimum, you need to have an emergency fund, which should be enough to cover eight months of your expenses. In case your world comes crashing down around you—for example, if you lost your job and needed a rent check—your emergency fund will save you financially. We’ll cover more of this in the coming days.
Action Time: 1 minute
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