Three reasons to put your savings on autopilot
By Joan Cox, Senior Vice President of Savings Products, Navy Federal
When it comes to saving money, shortcuts are few and far between. It takes hard work and determination, especially if you’re balancing a budget and managing debt. However, there’s one trick you can add to your arsenal to make saving a whole lot easier.
Make it automatic. It’s easy, and an effective way to boost your bottom line.
Before you start, make sure you keep enough in your checking account to cover your bills and expenses. Then, it’s as simple as setting up a recurring transfer to your savings account of choice. You can do this via myPay, your employer or through your financial institution. This way, the money goes straight to savings, and you avoid spending it.
Sounds good, but is it worth doing? Here are a few reasons you should give it a try.
You’ll reach goals faster
When you set up automatic contributions from your pay to a savings account, you can easily calculate when you’ll reach your goals. If you need to pick up the pace, you can set your contribution higher based on what your budget allows.
Most banks and credit unions offer a type of deposit account known as a certificate. When you open one, you agree to a set term, or time period where you won’t be able to withdraw from the account without incurring a fee. Generally speaking, that also means you’re going to get a better interest rate than a standard savings account. If you want to earn more interest on your deposits, then a certificate is the way to go.
Most certificates have terms that range from a few months to five years or more. Usually, they require a minimum deposit to open. For instance, Navy Federal has certificate options for small savers who can start with as little as $50 dollars.
You’ll be set up for long-term success
When it comes to the long term, automatic saving is even more effective. Regular, consistent contributions add up over time, even if they’re small.
You may also choose to use a specific type of savings account called a club account, or as it's known at Navy Federal, a SaveFirst Account. Many use these accounts for holiday or vacation saving, but you can use a club account for any goal. In fact, you can even name your account to match your goal!
These accounts generally carry a term, similar to how certificates work. Once you’ve named your account, set up automatic contributions and set a maturity date, you’ll be in a great position to meet your goals.
You’ll make saving a habit
As any personal finance guru will tell you, inertia is a powerful force. Once you make your savings automatic, it’s likely you’ll find more ways to improve your finances.
Remember to check your progress on a monthly basis. Not only will it be rewarding to see your savings grow, but it will help you stick to your plan. If you notice any shortcomings, you can adjust accordingly.
We often increase our spending when our finances improve. However, we should be doing the exact opposite. For example, if you receive a promotion, tax refund or come into some extra cash, consider saving some or all of it. These are all great reasons to increase your savings or start a savings plan in the first place.
Work with a financial institution you trust and make your savings automatic. Your future self will thank you!
Are you trying to save money? Let Military Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. We'll keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.
@NavyFederal provides three great reasons why automatic is the best way to go when it comes to saving >> http://bit.ly/2F0WRgV @MilitarySaves
- Written by Guest Blogger
- Category: Blog
- Published: 01 March 2018