Automating Your Savings and Investments

Written by: Scott Sery

One of the hardest parts of saving is remembering to save.  As humans, we have a great knack to forget the things that are not desirable or that can be painful to do.  While many people rely on their willpower to remember to contribute to their savings or retirement plan, and often make excuses as to why they cannot this month, some will simply set it up so that all contributions are automatically deducted from their checking account.

As a financially savvy person, you know how important it is to save for those times when emergencies and opportunities pop up.   Saying you will start an emergency fund, and actually doing it, are two different things.  People talk the talk all the time, but in the end, they decide their money will be spent elsewhere.  If the time has been spent to create a budget, any saver will know exactly how much they can afford to put into their emergency fund.  As soon as their paycheck clears, and it will almost always clear on the same day of the month, a portion should automatically transfer to their savings, and another portion automatically to their investments.

There are a lot of people who have an irrational fear of automation.  They think they will accidentally be overdrawn on their checking account and end up paying fees, or they feel they will not have enough money to pay the bills one month.  So rather than make saving easy, they attempt to remember to transfer money every month.  It is like a New Year’s Resolution.  They will remember for a few months, but after a while they will start making excuses about the bills being higher, or they forgot so they will do it next month, or they will pull from countless excuses.  The only excuse is they did not want to take the time to set up automatic deposits, and in the end, they suffer for it.

After the check clears and the savings have been deposited, now is the time to pay the bills.  With a good budget written out, the bills should come as no surprise.  Since there is a penalty attached to “forgetting” to pay a bill, most people will not actually forget.  But why waste the time to write a bunch of checks every month?  Almost all companies offer free automatic bill pay, and almost every bank account does so too.   Instead set these up to be automatic as well.  That way the only money left in the checking account is the money that can be spent on leisure and pleasure.

It is easy to save for emergencies, retirement, and pay all the bills without ever writing a check.  Sitting and counting up the hours saved over the course of the year would yield some astounding results.  In the end, if you end up automating your savings, you will have a healthy emergency fund, a healthy retirement fund, and will not have thought twice about investing in your future.


Automating Your Savings and Investments

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