Set up an Automatic Savings Plan
When you know you have to save money, you probably decide you’ll save when you can. After you got paid you paid your bills, bought some groceries, and maybe had a night out. By the end of the week you might have 5, 10, or 20 dollars that you can spare to put into savings.
Do you know how much money you will save this way?
Not much. If you consider saving money just something you do if you can or feel like it, you will never save anything. You need to have a plan and be committed.
Make Saving Goals
You need to start any savings plan by making goals. Are you trying to save for a car? Write it down as a goal. Decide how much you want to save and when you want to have the money by. If you want to save $5,000 in 15 months, you will need to save about $334 per month. If that is too much for you or if you feel like you could contribute more, adjust it.
Make a savings goal for anything you want to save for, even if it’s very long term. If you have several separate accounts, you can add $5 a month to an account if you really want to. It’s the idea of having a plan and being committed to it and following through that will help you achieve your goals.
Set up an Automatic Savings Plan
ING Direct has an excellent feature that allows you to save regularly called an Automatic Savings Plan. You can set a certain amount to be put into the account every month, week, biweekly, or twice per month. You can even set it up for just a certain amount of time. For example, if you want to save $500 in 5 months, you can set it up to put $50 aside twice a month and have it end in exactly 5 months so that it stops taking out money when you’ve reached your savings goal.
The Automatic Savings Plan works by depositing money from your checking account to the savings account you decide on a regular basis. This is a great way to “Pay yourself first”. Paying yourself first is a popular and effective savings technique. It shows the importance of savings.
You pay yourself first before you pay anything else by putting it aside for savings. It’s just like paying a bill, but you’re the recipient. Soon, you won’t think twice about it, it will be just like paying your mortgage or utilities bill. It’s an automatic part of your financing and you will be surprised how much you can save and how much you will earn from the interest.