Wednesday of Military Saves Week 2013 is all about automatic savings. Automatic savings are an amazing tool for building savings even if you are busy, disorganized, or unmotivated. You’d be amazed at what you can accomplish when you don’t have to do anything!
The Military Saves Week website has some ideas on making savings automatic, but you know I’ve always got to chime in with my thoughts, too.
- Keep your automatic savings somewhere that it is harder to access quickly. I set up a separate savings account at USAA, but I also have a credit card there. It is wwaayy to easy to just pay my credit card bill with my savings. Fail! If you lack discipline, like me, you want to have to work to get to your money. A credit union or bank where you have no other accounts is perfect, as long as they’re not going to charge you fees.
- Increase your savings amount with each pay raise or other life event. We started saving less than $50 a month, and now we’re up to 20% of our income. It was relatively painless and the money is really starting to add up.
- Give yourself a goal. Saving for the sake of saving isn’t going to inspire you. What will? In my case, the idea of moving back to the United States, having to buy a car and possibly a house, gave me a dollar figure and the desire to reach it.
About that million dollars I promised? If you started saving $100 a month at 20 years old, and increased your savings by 10% each year, you could have a million dollars saved before you were 60 years old. (using 5% interest consistently over the entire 40 years.) How awesome would that be? Even if you don’t like my numbers, you can use any number of online savings calculators to estimate what you could save, using the info that you like.
The important thing about automatic savings is that you have to get started. All the thinking, planning, and talking are useless. So, what are you waiting for?