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Over time, I’ve tried to make many responsible financial decisions, like avoiding credit card debt and tracking my expenses to avoid waste. But while my efforts to manage my money wisely have helped me in many ways, there is one choice that stands out above all others in terms of the impact it has had.
This decision automated my savings. I’ve set up automatic transfers from my checking account to my brokerage accounts and to different savings accounts, and it’s made a bigger difference than any other action I’ve taken to try to build wealth over the years.
This is how I automated my savings
When I decided to automate my savings, I wanted to make sure I did it in the smartest way possible.
This meant making sure I was putting enough money aside each month to be on track to meet the financial goals I set for myself. It also meant making sure that I had never overdrawn my bank account or incurred debt by transferring money into savings that I could not afford.
To do this, I first figured out what my main financial goals were, including how much to save for things like retirement, vacations, repairs and buying a new car, a down payment on the house, etc After calculating how much to save and my timeline for doing so, I was able to easily assess how much to invest in savings and brokerage accounts each month.
Then the next step was to build a budget around that. I made sure to allocate money to each different goal as well as essential expenses and discretionary costs. Once I set my budget, I know that if I stick to it, I should have the money in my bank account to transfer the required amount to savings on a regular schedule.
All I had to do was access my bank accounts, savings accounts and brokerage accounts and make sure the funds were transferred to the right places on the day I got paid so that I didn’t have the possibility of using the money allocated for savings. on something else.
Here’s why automating my savings really paid off
This approach has paid off really well for me because once I set up automatic money transfers, I haven’t backed down from reducing the funds I dedicate to my goals.
If I wanted to stop the transfer of my money to my savings or brokerage accounts, I would have to log into my account long before the transfer and make this change. It takes more effort than just leaving things as they are – and having to go through this process gives me time to think about whether it’s actually a smart idea.
Each time I have considered canceling a transfer of money to savings, I have decided that I prefer to continue working towards my planned goals. And thanks to that, I achieved all my short-term goals and I’m on the right track for the long-term ones. The initial effort was worth it, as I am now using my money to improve my life in the long term, and it takes no effort on my part.
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