How to Automate Your Savings and Stop Stressing About Money

Is it hard for you to save money? You might start the month with plans to save whatever is left over. Then, you look at your bank account on payday and the money is gone. You do not even know where you spent it.

This is a common trap. Trying to save money using willpower alone does not work for most people. The secret to building your savings is to remove yourself from the process. You need to automate your savings so you do not have to think about it.

When you set up a system that does the work for you, your money grows on autopilot. It is the easiest way to build wealth. To learn more about managing your money, check out these personal finance tips that actually work.

Why Manual Saving Fails Most of the Time

Most people try to save money the wrong way. They pay their bills first and spend money on dining out or shopping. They plan to save whatever is left at the end of the month, but there is almost never anything left.

Your spending always expands to fit your available balance. If you see one thousand dollars in your checking account, you feel rich. You spend more money because you think you have it. By the end of the month, your balance is zero.

Manual saving also requires you to make a choice every single month. You have to decide to move money to your savings account. This takes mental effort. When you are tired or stressed, you will choose to spend that money instead of saving it. Removing the choice makes saving effortless.

How to Set Up Your Automated Money System

Setting up an automatic savings system is very easy. It takes less than an hour, but it will save you years of money stress. There are two ways to do this.

First, ask your employer to split your direct deposit. Most systems let you send pay to more than one account. You can send eighty percent of your pay to checking and twenty percent straight to savings. Since you never see that money in your main account, you never miss it.

Second, you can set up automatic transfers with your bank. You can schedule a transfer to happen every payday. If you get paid on the first of the month, set up a transfer for the second. This moves the money before you have a chance to spend it. If you need help creating a basic budget first, read our guide on budgeting for beginners to find the right numbers for your lifestyle.

The Best Way to Split Your Paycheck

You might wonder how much money you should save. A good starting point is to save ten to twenty percent of your income. Do not worry if you cannot save that much right now. The exact amount does not matter as much as the habit itself.

If you can only save ten dollars a week, start there. Set up an automatic transfer for ten dollars every Friday. You will not miss ten dollars. Once you get used to that, raise the amount to fifteen dollars. Slowly increase the number over time. You will be surprised by how fast your money grows when you save consistently.

Suppose you make three thousand dollars a month and save ten percent. That is three hundred dollars. In one year, you will have three thousand six hundred dollars saved. In five years, you will have eighteen thousand dollars. This happens without you making a single hard decision.

Keep Your Savings Out of Sight

To make this system work, you must keep your savings separate from your spending money. If your savings account is at the same bank as your checking account, it is too easy to transfer money back. You will be tempted to use your savings for things you do not need.

I recommend opening a savings account at a completely different bank. Choose an online bank that offers a high interest rate. It should be a bank that does not have physical branches in your town. This makes it harder to get to your money quickly.

It takes two or three days to transfer money from an online bank to your regular checking account. This delay is a good thing. It stops you from making impulse purchases with your savings. You will only use the money when you really need it.

Start Small and Watch Your Money Grow

You do not need to be rich to start saving money. You just need a system that works. Automation takes away the guilt and stress of saving. You can spend the money in your checking account without feeling bad because you know your savings are already taken care of.

Log in to your bank account today. Set up a small weekly transfer to your savings account. Start with an amount that feels easy. You will feel great watching your balance grow every month without any extra work.