In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.
Today’s post is dedicated to the Auto-Save Challenge.
What is it: You set up a set amount to be transferred from your checking to your savings account every month. I recommend a minimum of $100. It helps you not think about the act of saving, thus making it less painful and reducing any temptation you might have to spend the money as it will already be gone.
Outcome: The results will vary but you should at least have $1,200 at the end of the year.
Variations: Some employers that offer direct deposit give you the option of splitting your check into different bank accounts. I once worked somewhere I could split my check across 10 different accounts! If you think you might be tempted to cancel the automated transfers with your bank, doing it with your employer makes it more difficult. You’d have to contact HR, fill out a form and have to wait at least one pay period. If anyone has ever dealt with HR, you know that you’re more likely to give up on the whole thing out of sheer frustration, than you are to pursue the change. Maybe if you wanted to interrupt your savings for an impulse buy, you’ll have enough time to come to your sense.
Why I like it: It’s effortless. Not everyone enjoys managing finances the way I do and if you can find a technique that makes it easier, then it takes away any potential excuse you might have to not save. .