This Post May Contain Affiliate Links

The power of automating your savings

Automating your savings is all about paying your future self first. By automating your savings it enables you to achieve your goals more constantly and with less resistance. Making saving feel like part of your monthly expenses rather than a last-minute thought on the 30th of each month - scrambling to get to gather the last bits of your paycheque to move over to a savings account.

The first steps to setting up a savings plan, and starting out on automating yours savings is creating a budget. This will allow you to set a percentage of your income you want to save and how much buffer (miscellaneous spending) money you need each month. This may take some trial and error for you to find out how much you can comfortably put away in savings automatically every month without having to later withdraw it that month for regular spending. 

Easy ways to automate your savings 

Make use of employer savings plans 

Most employers will have some for of retirement savings plan. For those readers in the UK you will probably have been "auto-enrolled" onto an employer pension/ retirement plan. The perk of these sort of plans is that you never see the money. Eliminating the temptation to spend it and adjusting your mentality about it. 
Saving 10-15% of your salary into your pension (taking into account matches) is a great place to start and depending on where you live there may be tax benefits for paying into your pension straight out of your salary: pre-tax (known as relief at source).

Set up regular deposits for pay-day.

Making use of your banks standing order feature you can set up regular amounts into your savings accounts. If you don't already have an emergency fund of 6 months' expenses this is the place to start. But once this is funded make use of multiple savings accounts to ear marked for different goals. Setting up sinking funds for expenses which you know will come up (car service, a new room etc) will help you be prepared for whatever life throws at you. What feels to be quite small contributions can quickly add up to a health savings pot through the power of compound interest. 

Make us of account auto-saving services

Some banks such as Lloyds "Save the Change" service allows you to opt into having your account round up expenses and save the change into a savings account. What might feel like small change, merely pennies, is siphoned off into an account at a rate you are unlikely to even notice.  Many other banks offer similar services (or you could even do it manually at the end of each day adjust your account down to a round figure). There are also some great apps out there for automatic savings such as Plum which use tech to figure out the optimal savings for you. 

Save your tax return /rebate

Even in countries which automate taxation tax returns are quite common. Consider this - you have managed to live without this money up until now. Throw it direct into your savings account and you'll have been effectively autosaving the whole of the tax year (though you may also want to look into getting your tax returns sorted to reduce  the rebate  - don't give the government free money!)

Do an end of month account sweep 

Your budget should include some buffer money that does not form part of your start-of-the-month automated savings plan. This is to allow you to get through the month when some expenses are greater than usual without having to dip into your emergency fund (which is for emergencies only!) or other sinking funds. However, you may not need to use all your buffer money or may be under budget in other areas in a month. At the end of the month - just before your next pay cheque comes in now is the time to do an "end-of-month account sweep". Take that money and deposit it into a savings account and start the new month afresh. 

How are you achieving your savings goals through automating savings?