Every day we make thousands if not millions of little decisions and our brains can only handle so much. It’s no surprise then that when it comes to savings, we are so drained from all the little decisions that we tend to neglect the big one of determining how much to save and spend each month. One way around this to put your savings on autopilot.
Be a Financial Pilot
I’ve never flown a plane before (because Microsoft Flight Simulator doesn’t really count), so I can only imagine how many different instruments and directions a pilot must pay attention to each flight. Yet, with autopilot so many of these minor choices can be offloaded to an automated system. Allowing pilots to focus on major issues. Putting your savings on autopilot works the same way.
Pay Yourself First
Most banks nowadays have features that will automatically transfer a set amount of money to a savings account on a set schedule. This could be monthly or every time you’re paid. If you have your pay direct deposited, many companies will also allow you to split your paycheck between multiple accounts. This makes depositing straight into your savings that much easier. Both of these options allow you to determine how much you want to save one time instead of making the decision on a weekly or monthly basis. This can help increase your savings faster.
Become an Unconscious Saver
If all of your money goes into a checking account and you consciously have to decide how much to withdraw to a savings account, chances are you won’t save as much as you could. You will be hesitant to withdraw too much because you may need to spend that money. However, if the money goes directly into your savings and you never see it in your checking account, you will naturally get used to seeing less money in the account and therefore spending less. The same way you won’t have to remove too much from your checking, you won’t want to move much of that hard-earned savings back to your checking account to cover for when you spent too much.
Also, much like autopilot, automating your savings can help you focus more on the bigger picture. Once you offload the mental process of determining what to save each paycheck, you can focus more on long term goals like retirement or saving for college.
Have you automated your savings? Let me know in the comments how doing so has impacted your savings rate.