People often fail to save enough because they don’t have the right systems in place to help them make monthly financial actions, but it’s not necessary to plan, budget and worry about savings because there are ways to make it a one time decision.
Some banks offer discounts and perks like waived fees if you setup a savings account with recurring deposits from your checking account. This allows the bank to loan out (and make) more money from holding your money while giving you a higher interest rate. Wait for a promotion and you might even earn a few dollars for setting this up.
Similarly, you can setup monthly recurring deposits to other accounts like an IRA, Roth IRA or 529 plan. Your work makes similar deposits on your behalf, but the additional benefit in this case is that the money goes directly to these accounts and never touches your checking account. You’re required to sign up for these options when you start a job, so make sure to set an appropriate amount upfront – you won’t ever miss the money.
Unlike the above approaches which hides money from yourself, a more recent alternative actively transfers money as you spend it. These “save the change” programs takes a purchase and rounds it up to the next dollar, depositing the difference into a separate savings account. You get the benefit of a larger checking balance and saving that increase as you make more purchases.
However you choose to save more, the key is to make the decision as soon as possible so your savings can accumulate and grow sooner. Once you’ve implemented the decision, you won’t have to worry about it again.
Leave a Reply