Why Automating My Savings Was My Best Financial Move Ever

This decision made a huge difference in helping me build wealth.

Over time, I've tried to make lots of responsible financial decisions such as avoiding credit card debt and tracking my spending to avoid waste. But while my efforts to be smart about my money have helped me in a number of ways, there's one choice that stands apart from all others in terms of the impact it has made.

That decision was automating my savings. I set up automatic transfers from my checking account into my brokerage accounts and into different savings accounts, and this made a bigger difference than all of the other actions I've taken to try to build wealth over the years.

Here's how I automated my savings

When I decided to automate my savings, I wanted to make sure I did this in the smartest way possible.

This meant ensuring I was putting enough money away each and every month to be on track to accomplish the financial goals I set for myself. It also meant making sure I never overdrafted my bank account or went into debt by having money transferred into savings that I couldn't afford.

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To do that, I first figured out what my key financial goals were, including how much to save for things like retirement, vacations, car repairs and new car purchases, a home down payment, and so on. After calculating the amount to save and my timeline for doing so, I was easily able to assess how much to invest in savings and brokerage accounts each month.

Then, the next step was to build a budget around that. I made sure to allocate money to each different goal as well as to essential spending and discretionary costs. Once I set my budget, I know that if I stuck to it, I should have the money in my bank account to transfer the requisite amount to savings on a regular schedule.

All that was left was to go to my bank accounts, savings accounts, and brokerage accounts and arrange for funds to be moved to the correct places on the day I was paid so I wouldn't have a chance to use the money allocated toward savings on anything else.

Here's why automating my savings really paid off

This approach has paid off big time for me because once I set up automatic transfers of money, I haven't gone back to reduce the funds I'm putting toward my goals.

If I wanted to stop the transfer of my money into my savings accounts or brokerage accounts, I would have to sign in to my account well before the transfer occurs and make that change. This takes more effort than just leaving things as they are -- and having to do this process gives me time to think about whether it's actually a smart idea.

Every time I've considered canceling a transfer of money into savings, I've decided I'd rather keep working toward my planned objectives. And because of that, I've accomplished all my short-term goals and I’m on track for my long-term ones. Making the initial effort was well worth it, since I'm now using my money to improve my life over the long term, and it requires no effort on my part to do so.