savings

Automatic savings or manually save?

 

 

One of the most important bills to pay is the bill paid to yourself. By putting a portion of each paycheck away into a liquid savings account you are supporting your future retirement, expenses and unforeseen emergencies.

You can set up your savings deposits one of two ways: automatically or manually.

"The key to saving for most people is to automate the process you want to pay yourself first by setting up direct deposit from your paycheck into a dedicated savings account."

By setting up direct deposit your bank will transfer a percentage or fixed amount of money into your savings account monthly, biweekly, or weekly.

Advantages? You can set it up and forget about it. By never seeing that money you won't be missing anything. This can also help you live on a smaller budget without even knowing the difference.

"Now a disciplined person may prefer to move the savings over manually but for most people that's not going to work because if you wait until the end of the month to save what's left over, for many people there's nothing left over."

By manually putting money into your savings you can see how much you are taking out of each pay check and watch your savings grow.

This might be an option for you if your paycheck amount varies from week to week. For example if you get a $400 dollar paycheck for two weeks but only 100 for the next two, you probably don't want direct deposit to take a set amount of money out every other week.

Depending on your financial situation one form is better than the other ... but which one?

"Automatic savings. It's easier you just have a fixed amount that you won't see and it will go automatically to your savings account, you don't have to worry about it every month."

"I would rather have it manually so I would have control over it so I know how much exactly is going in."

"Direct deposit." [And why is that?] "Because it saves me the time of going to the bank."

"I would rather have it be automatic because I feel like I would take it out for kind of silly things."

"I would rather put the money manually myself. It seems a lot safer."

Check out the simple savings calculator on Bankrate.com under the checking and savings tab. It's an easy way to calculate how much you can save over a period of time.

Remember pay yourself first. For Bankrate.com, I'm Theresa Heintz.

 

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