With all of the technological enhancements of electronic banking, it is possible to completely automate your savings process. If you are the type of person who has trouble keeping up with a saving schedule, you may want to take heed of the tips below that can help you strategize to save for a large asset purchase or for retirement.
1. Set up an independent account.
You will need a savings account that is separate from any of your other accounts. Do not attach any debit or credit cards to this account. It is often good to keep this account in a bank other than the institution in which you have your main checking accounts. This way, you will not be tempted to dip into the pot.
2. Set up direct deposit on your independent account.
In order to help automate the funding of your account, you can set up a direct deposit. If you are employed, your employer should offer this option. If you are an independent contractor or have your own business, you may have to take a few additional steps. However, the trouble that you will save yourself in the future will be worth it.
You can also set up a direct deposit from another account so that you can set aside exactly the amount of money that you would like to save each month. By taking this money out before you have a chance to spend it, you begin to think of that money as a bill rather than as expendable income. This will allow your savings to grow without you spending it on frivolous things.
Because savings accounts today often do not keep up with inflation, you will need to diversify your savings if you want to make any real money. Set up direct deposit with money market accounts, certificates of deposit, mutual funds and other safe variable interest rate accounts so that your money can continue to grow beyond the rate of inflation. As you get used to funding each of these accounts automatically, you can actually begin to focus your efforts on other things.
If your employment situation changes, make sure that you take the time to update your accounts so that you can continue to automate the process of your savings.
