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Money Hack--The Easiest Way to Save Money -- Put Your Savings on Autopilot

Saving money may not feel like your strong suit. It’s easy to get off track and save less than you intended when you’re not consistently saving a portion of every paycheck. But that doesn’t mean you can’t get ahead of the savings game. Automating your savings could be just what you need to get your finances in tip-top shape to ensure you reach your savings goals.

Is it time to automate?

Whether you get paid every two weeks or on a monthly basis, you may have a hard time regularly setting aside money for a savings account or even a retirement fund. Many people fall into the habit of saving only what is left over after paying their living expenses and covering the cost of discretionary purchases. The challenge here is that you likely won’t have a consistent amount being deposited into your savings account every paycheck, which means your savings contributions will be… at best …fairly unpredictable. If you fall into this camp, now may be just the time to automate your savings.

Benefits of automating your savings

Automating your savings can turn your savings deposits into another monthly expense. This can help you prioritize your savings contributions, reducing the temptation to spend those funds without planning ahead. When you automate your savings, it’s easier to ‘pay yourself first’ when that paycheck comes in, explains Beverly Harzog, credit card expert and author of The Debt Escape Plan. “Having it automated makes sure that you don’t forget to make the deposit into your savings account,” she says. “It’s like making a commitment to building an emergency fund.”

Not sold yet? Some other benefits of automating your savings include:

  • Save time: One of the biggest benefits of automating your savings is that it will free up time, Harzog says. Turning your savings contributions into a recurring monthly expense means you don’t have to keep thinking about how much you should save, when to make the deposit or transfer and whether you will meet your savings goals by the end of the quarter or year.
  • Save more over time: You could end up saving more when money is automatically transferred into your savings account. It’s better to save what you have rather than saving what you have left.
  • Get out of debt faster: Credit card debt makes up 28% of the nation’s household debt, while student loans make up 42%, according to LendingTree’s Consumer Debt Outlook. If you’re determined to pay off student loans, credit card balances and other debts, you could automate your savings into an account specifically for your debt. Then you can pay these expenses off in one lump sum when you’ve built up enough funds. The automatic deposit will help you stay on track, making it easier for you to pay off debts quickly so you don’t incur too much interest.

Steps to automate your savings

It all starts with setting a realistic savings goal by calculating how much you can reasonably afford to save each month. At WKFCU, you can use payroll deduction to have an amount of your choosing deposited into your savings account each pay period.

If you want to be consistent with your savings contributions, start small and then increase the deposit amount when you feel confident that you can set aside more. You could start with only 5% of your paycheck and at the end of the month, increase that amount by 1% until you reach an amount that fits your budget. You could aim for 10% of your paycheck or more depending on your savings goals.

When automating your savings, it’s also a good idea to be flexible with the amount you deposit. A positive change in your financial situation, such as a raise at work, means it may be time to modify the amount you save each month. At WKFCU you can change the amount you send to savings with a phone call.

Automating your savings can make money management—and reaching your savings goals—that much easier. Take the time to set some realistic goals and choose a monthly savings contribution you’re comfortable making for at least a few months. You’ll find it easier to adjust your spending to accommodate for this expense and will be building up that savings account with minimal effort.

Remember at your credit union you can set up automatic payroll deductions to your regular savings account or to special accounts you may choose to open. Changes to the amount you save are easy to make -- just give us a call -- Shreveport:318-621-0605; Bossier: 318-629-5622.

(Reprinted in part from discover.com/online-banking)

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