You keep adding to the pot and watch it steadily grow. But the reality is that we have busy, often quite chaotic lives, and we don’t always do the things we should.
Sometimes we forget, sometimes we are distracted, and sometimes we give into temptation and spend the money we should be saving on something we fancy but don’t really need.
The easiest way you can avoid this kind of behaviour — which affects us all from time to time — is to automate your savings, and they’ll then grow with interest earned, even if you completely forget about them.
How to Automate Your Savings
There are several ways to automate your savings, so why not try one or more of them out and get into the habit of saving money automatically.
1. Set Up a Standing Order
Most people know roughly what their pay cheque will be each month, and how much they can afford to save, be it 5%, 10%, or even more. Set up a standing order to automate your savings.
Do it so that the bank will automatically transfer the amount from your current account to your savings account one or two days after your salary is paid in, so that it is already safely out of the way before you start being tempted to spend it.
For example by automating your contribution to your pension, savings and investment accounts before spending you can become a saver rather than a spender, thus significantly increase the possibility of achieving your financial goals and grow your net worth.
Start with automating a relatively small amount of money and then, if you find you aren’t really missing it that much, slowly increase the value of the standing order month on month, and watch your savings grow.
An excellent book to read on automating your savings is The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach.
Related: How to Pay to Yourself First
2. Keep a Coin Jar
All of us have small change lying around. If you put it in your wallet, you tend to spend it on fripperies — chocolate, magazines, lottery tickets, etc.
Instead, get into the habit of taking any change out of your purse at the end of each day, and put it into a money box or coin jar. But once this habit locks in and becomes automatic, saving becomes easier. There are loads of saving jars on Amazon to get you started.
At the end of the month, total up the coins and pay them into your savings account. It is an easy way to automate your savings and decrease your non-essential spending at the same time
3. Get a One Account or a Saving App/Assistance
Another great way to auomate your savings is to get a one account, a saving app or assistance. Virgin has a great product which is a current account, savings account, and mortgage all in one, and a number of other banks are introducing similar products.
Rather than penalising you for paying off your mortgage early, an algorithm calculates how much you can afford to pay, and channels money directly from your current account into mortgage payments and savings.
There are loads apps that can help you save money automatically such as Plum. Plum is a saving assistance that can help you save money effortlessly without thinking about it.
Plum automatically takes small amounts out of your current account and deposits the money into your Plum savings account based on your individual circumstances.
When you automate your savings in this way, you can pay off your mortgage faster, reducing the total amount of interest you have to pay, and adding to your savings at the same time.
4. Save Your Cash Back
Many accounts and credit cards offer cash back on purchases as an incentive to make you use them more.
The best options currently available will pay you 5% on purchases for the first three months, and 1% thereafter, so the sums can quickly add up.
Websites such as Quidco and TopCashback will let you earn cash back on your purchases, effectively giving you a discount.
Rather than spending this money (which is what the card providers assume you will do), check your card or account statement at the end of each month, and transfer the cash back into your savings account.
If you automate your savings in this way, you’ll be saving money even as you spend on everyday essentials like food shopping, the electricity bill, and petrol
5. Do Your Food Shopping Online
Most of us have a Tesco Clubcard, Nectar Card, or similar that we use to collect points on our weekly shop.
Discount vouchers and points vouchers arrive periodically in the post, but often they’re lost amongst other paperwork, or expire before we have time to use them.
But did you know that you can often still access your supposedly expired vouchers online? Login to your loyalty card account online, get the voucher numbers, and you can still offset them against your online food shopping bill.
The supermarket has done the hard work for you, but just not told you how to take advantage of it. It’s another example of how when you automate your savings, the pounds really can add up.
With the use of online banking and changing simple habits, it is quick and easy to automate your savings.
When you take the thinking time out of the equation, saving money becomes much easier, and therefore you are more likely to be able to stick to it.
What techniques do you already use to automate your savings? Which new things might you try? Commit to automate your savings now, and watch your savings grow.
You Might Also Like
Latest posts by Money Nuggets (see all)
- How to Claim Tax Back On PPI Interest - March 19, 2019
- How to Close the Financial Gender Gap Together to Reach Gender Equality - March 8, 2019
- What Women Want: How to Attract and Retain Female Clients - March 5, 2019