There are a million reasons and one to save if you can: from building up a nest egg, to growing your retirement savings, to making sure you have the funds you need for a trip with friends.
It's true that many people these days struggle to save because they don't actually have much left over after all their needs are out of the way. (And in that case, earning more money, rather than figuring out a million ways to scrimp and save, will get you further.) But if you do have some room to adjust even a fraction of your "wants" column to savings, there are big reasons to get going. Here are five upsides to automating savings to make life a little easier. And if you already love saving, don't let us take the joy of transferring money to your savings account away. But maybe these tips will add to the rush.
1. If you automate ... you'll make saving a priority without trying.
The virtues of paying yourself first are regularly espoused, and for good reason. Of course you have to pay your bills; things like rent/housing costs, transportation, and even a phone plan are necessities. But if you have the cash to spare, treating your savings as a discretionary line item in your budget rather than a crucial part of your financial picture will always make you see it as an afterthought.
So, instead of relegating savings as the thing you maaaybe do after all of your other spending has happened, analyze your budget. See how much you have left over after needs, and what you could reasonably autosave toward savings each month.
2. If you automate ... you won't notice the difference.
Various theories in cognitive psychology are used to explain why people who can save don't, from loss aversion (being more willing to give up a big win rather than experience a smaller loss), to present bias (accepting a small sum immediately instead of waiting for a bigger amount in the future). Whether you attribute your reluctance to save to an armchair rationale or not, there are certainly benefits to not leaving savings up to your mood.
Not everyone enjoys saving money, and delaying their ability to reap the rewards of cash they've earned until some faraway date in the future. If you fall in that camp, try to hack your own disposition. If you automate savings, you may not even notice the difference. And if you do, you can always decide later whether what you want to spend it on is worth withdrawing from your savings.
3. If you automate ... the surprise will motivate you.
One of the best things about using an online savings account is the inconvenience. (Yes, you're reading that correctly.) With savings accounts that can be accessed at brick-and-mortar locations or ATMs, there's always a chance you'll dip into the account if you're feeling a little skint. But with online accounts, you'll have to log in or enter the app, request a transfer, and sometimes wait a few business days for the withdrawal to hit your checking account.
That inconvenience works especially well when combined with autosaves: I decide how much money to transfer from my checking account to my Barclays online high-yield savings account each month, but I still get a little thrill when I log on and see what that amounts to overall. Saving in the moment isn't always fun, but looking back at the small, growing egg is always encouraging.
4. If you automate ... you'll save more in the long run.
Nearly half of U.S. households have zero dollars saved for retirement. With pensions becoming a rarity, finding some way to save for your post-work years is crucial. One solution some companies have adopted is to auto-enroll new employees in 401(k) and other employer-sponsored plans.
Having your company take the reigns might seem like an overreach, but there's a good reason for doing so. In 2012, Fidelity found that 76% of 20- to 24-year-old workers stayed in its opt-out plans, compared with 20% who had to sign up. And a study from the National Bureau of Economic Research found that 401(k) enrollment among opt-in workers hovered around 40-50%, but reached nearly 100% with opt-out employees. Why? Workers tend to "follow the path of least resistance," the researchers found. Put less obliquely: Most people are lazy. It takes more work to undo something than to just keep doing it.
If your job doesn't have an auto-enroll program or sponsor a retirement plan at all, create one for yourself. Siphon even a small percentage of your income from your checking account into an IRA or other savings vehicle so you don't feel it. The pain of having to dig into it could lead to pleasure in several years' time.
5. If you automate ... you'll be less stressed out.
Not all saving has to be long-term; some of it can be goal oriented — for parties, gifts, vacations, and even personal treats.
These days, being a wedding guest or participant can cost hundreds of dollars. Most people don't have that kind of cash on hand, so working up to that or other big-ticket items and events is key. You could set a monthly transfer from your checking account to savings, working backward to determine how much time you'll need to reach your goal amount. Or, you could try a few savings apps that siphon a bit of cash from your main account, depending on the parameters you set.
However you do it, automating these goals will make it easier to reach them — and enjoy the fruits of your passive labor when the time comes.