What’s not to like about an automated savings plan? Once set up, they require no additional effort and help you save for specific life experiences, like a new car, a vacation or graduate school.
But before we get into the benefits of an automatic savings plan, let’s clarify what they are.
What are Automatic Savings Plans?
You can set up an automatic, self-repeating money transfers, usually from your bank checking account into your bank savings accounts. You choose the date the amount is transferred and the amount you want to save. After that, it happens automatically following your selected schedule.
The Benefits of Automatic Savings Plans
Automatic savings accounts plans offer convenience and an easy way to ensure you’re saving regularly. Here are the top benefits:
1. No Worries: Creating an automatic transfer takes the worry – and the forgetfulness – out of making regular savings deposits. Automatic savings are the ultimate “set it and forget it” financial savings tool.
2. Curbs The Desire To Spend: When your money is automatically deposited into your savings account, there’s no temptation to spend it.
3. Plenty Of Flexibility: Use these accounts to plan short-term and long-term savings campaigns. For instance, you can save for a vacation over a period of three months or so, and save for retirement for 30 years or more, depending on the type of account you set up.
4. Potentially Better Rates: Depending on the terms of your account, you may be able to “jump up” up to a higher-paying savings account rate, once a specific financial threshold is met (say, $10,000, for example.)It’s up to you to crest that balance threshold, but once you do, the higher rates are a solid benefit.
A few housekeeping issues
Note that most banks won’t credit your money transfer on Sunday’s and holidays so look for it in your savings account on the next business day.
Also, chances are you can set up an automatic paycheck deposit with your employer – ask your employer or human resources representative for details. Often, employers can split the paycheck deposit into both your checking and savings accounts.
So give automatic savings plans a try – you’ll save more money, build better financial habits and, once your plan is rolling, you’ll see your savings stockpile grow larger and larger – one automatic deposit at a time.