Saving money is more important than ever to weather an unforeseen financial storm. One thing people are not particularly good at, however, is saving money. According to a recent survey by the Federal Reserve Board, a large percentage (almost 40%) of Americans would have to either borrow money or couldn’t pay for a $400 savings emergency expense.
The Consumer FInancial Protection Bureau also recently wrote a piece about how to help save money. One of the best ways to do so is through something called automatic saving. This is pretty much what it sounds like. But the ways to go about it can be quite unique. Some examples are:
1.) Automatic savings account transfers via your bank or credit union. Almost all banks and credit unions allow for an automatic savings procedure. You can either set up timed transfers from checking to savings every week or month, or you can enroll in some type of program that rounds up to the nearest whole dollar on every purchase you make. (Some examples of this program are below – we do not endorse any program specifically). These programs connect some kind of a savings vehicle to your debit card or credit card and round up your purchases to the nearest dollar. They then automatically transfer that amount from your card balance to your savings account.
2.) Automatic savings via your employer. This option is pretty simple if you have direct deposit available through your employer. Almost any employer has the ability to split your payroll into multiple accounts. You can simply tell them to deposit a percentage or a dollar amount out of your check every payroll period into a savings account instead of just a primary checking account.
Whether using your bank or an app, or your own employer, there are several strategies and ways to save money every month. It is imperative that you do so you don’t end up in an emergency situation like the 40% of people discussed earlier. Even if you pay yourself first and deposit a small amount in savings each pay period, you will be better prepared a year from now for unforeseen circumstances.
Regardless of whether it’s through your bank or credit union, employer, or other savings applications, setting up an automatic saving program can be one of the easiest and most effective ways to get started with a new savings habit. Consistently putting money aside—even in small amounts—will add up over time.
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