Automatic Savings Plan
An automatic savings plan is a tool that allows you to save money without even thinking about it. Here’s how it works:
Setting up the plan:
- Choose a savings goal: You might want to save for a down payment on a house, a new car, a specific emergency fund, or anything else.
- Select the amount: Decide how much you want to save each month.
- Choose the trigger: Select the events that will trigger your savings contribution, such as payday, a scheduled payment, or a specific purchase.
- Select the account: Choose where you want the savings money to go, such as a separate savings account or your main account.
Mechanism:
Once the plan is set up, the software automatically transfers the specified amount from your trigger account to your savings account on the designated trigger date.
Benefits:
- Make saving effortless: You don’t have to manually move money around, reducing the temptation to spend it.
- Set it and forget it: Once the plan is set up, you don’t have to worry about remembering to save.
- Consistency: It ensures you save consistently, even when you’re busy or have fluctuating income.
- Financial freedom: Consistent saving can help you reach your financial goals faster and with less stress.
Here are some tools and platforms that offer automatic savings plans:
- Banks: Many banks offer automatic savings features as part of their mobile apps.
- Financial management tools: Tools like Mint and NerdWallet allow you to track your savings and automate transfers.
- Investment platforms: Platforms like robo-advisors and Acorns allow you to set up automatic savings for specific investment goals.
Here are some additional tips for using automatic savings plans:
- Start small: Begin with a small savings goal and a manageable amount to save.
- Revisit and adjust: Periodically review your savings plan and adjust the amount you save or the trigger events as needed.
- Celebrate your progress: Track your savings progress and reward yourself for reaching milestones.
By setting up an automatic savings plan, you can start accumulating savings effortlessly and reach your financial goals faster.
FAQs
How can I automatically put money in a savings account?
Most banks offer an automatic transfer option that allows you to set up recurring transfers from your checking to your savings account. You can specify the amount and frequency, such as weekly or monthly, to build savings effortlessly.
What is auto sweep in a savings account?
Auto sweep is a feature that automatically transfers surplus funds from your savings account to a higher-interest account or fixed deposit, helping you earn more on idle funds.
What is the 50/30/20 rule for saving money?
The 50/30/20 rule suggests allocating 50% of income to needs, 30% to wants, and 20% to savings or debt repayment, making it a simple budgeting framework.
What is an automatic savings app?
Automatic savings apps like Digit, Qapital, or Acorns help users save money by automating transfers to savings or investment accounts based on set rules, spending habits, or even rounding up purchases.
What is the purpose of auto-save in banking?
Auto-save automatically transfers money into savings based on your chosen settings, making it easier to save consistently and reach financial goals.
