Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

How to automate your wealth building strategy

In an automatic savings plan a fixed amount of money automatically gets deposited into a person’s account at specific intervals. It is a kind of personal savings system which ensures that a certain amount of money gets deposited into your savings account with every paycheck, be it on a monthly, bi-monthly, weekly or daily basis.

Steps to automate your savings

  • Decide how much to save: First you will have to earmark an amount that you want to save every week or two weeks or month. No amount is too big or too small when it comes to savings. You can decide to save 5% of your paycheck, or 20% or 50%. This decision depends on your savings goals. Saving around 15-20% of your paycheck is usually adequate in the long term.
  • Open a savings account: After deciding on the amount that you want to save, you need to open a savings account that will give you tax advantage. These tax-advantaged accounts will benefit in the long-run when the amount accumulated in the accounts becomes large. The savings account can be individual or joint, depending on whether you want anybody else to have access to that account. Make sure that this is not the account from where you make withdrawals for your daily expenses.
  • Set dates for automatic savings: After opening the savings account, you need to set a day on which a specific amount will automatically get transferred from you paycheck to your savings account. If you receive you paycheck on a fixed day every month, then you can set your automatic savings date as the next day. You can even decide on the amount and frequency of the transfers. For example, you might not want to transfer the entire amount that you want to save on one day. In such situations you can distribute the amount into multiple transfers carried out over a week or a month.
  • Check your savings account regularly: Check your savings account regularly to match your balances. The amount saved plus your monthly expenses should add up to the amount that you received in your paycheck. Additionally, by checking your savings account regularly you feel encouraged to save more as you see your money growing.

Benefits of automating your savings

By automating your savings, you prioritise your savings contributions by paying yourself first. The amount gets transferred to your savings account before you can use the money for any other expenses like rent, car loan, household or electricity.

The best part is that you can automate your savings for any purpose – retirement, buying a house, emergency fund or further studies. Over a long period of time, the small deposits accumulate into a huge amount and even earn compound interest.

Points to remember

  • Try not to withdraw from the account until it is for the purpose for which you have been saving in it.
  • Look for a bank which allows you to change the amount you want to save in the account. This will help you in saving more when you receive a pay hike or a bonus.
  • Choose a monthly savings amount that you are comfortable with. Do not get carried away and set unrealistic goals as it get difficult to implement.
  • It will be a few months before you get used to the idea of the savings account. Until then hold tight and be strong willed about not withdrawing from that account.