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Why should I set up an automatic savings plan?

Some people use automatic savings to build a source of funds for emergencies. Others want to save for homes, cars, vacations, or other large purchases and want an easy way to let funds accumulate.
Sep 9th 2020
2 min read
Why should I set up an automatic savings plan?
No matter what your source of motivation, automatic savings plans are usually created for a specific purpose. Retirement is one, saving for a child’s or grandchild’s college education is another. Even saving a few dollars each week can go a long way towards helping you achieve your goal.

To get started, try tracking your spending for a month to see how much you can afford to set aside. Although an automatic plan will reduce the amount of money you have left to spend on other things, it can become a great motivator to start budgeting.

 

Can I afford an automatic savings plan?

If you’re not sure, track your spending for a month to see where money is going. You may find budgeting a helpful tool. Many people find that they can scrape up an extra $25 or more when they try hard enough.

If you get a wage increase or a tax refund, you’ve got an instant source of money. You can also change your federal and state tax withholdings to increase your take-home pay. (But remember that setting your withholdings too low can result in penalties being charged by the government.)

Usually, paying off debts more quickly will leave you with a little extra to save or invest. If none of these ideas work for you, consider getting a part-time job on the side or starting a consulting or freelance business out of your home, if only for a while.

 

Why not give it a try?

Getting started is what matters most because growth potentials change over time. An automatic savings plan is just one way to begin to build a rainy-day fund that can grow into an investment plan for you and your family. Think about it. How could you get started today? 

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