Automated Savings for Long Term Goals
June 5, 2018
Written by Rebecca Feeley
Automating your savings for long term savings goals is the most effective way to save. It leaves no room for forgetting. And it leaves no room for changing your mind. The key is to do it in increments and at a frequency that doesn’t “hurt” too bad.
A good example of this is when my daughter was born, we opened a high yield savings account to start saving for her college. I set up an automatic transfer from our family checking account into the new savings account for $25 per week. That’s equivalent to a couple of coffees at Starbucks or take-out pizza. It’s not the end of the world, and it’s not such a large dollar amount that we will potentially cancel the standing transfer instructions to recoup our money for other needs. We’ll put away $1,300/year plus whatever cash gifts she receives for birthdays, Christmas, etc. It certainly won’t be enough to cover 4 years of college, but it’ll move us in the right direction. As our financial situation changes, hopefully we can increase that weekly transfer. But the key is to keep it at a dollar amount that is relatively painless.