Automatic savings

Training 245 minutesautomatic savings

You are 26, make coffee at a café and study at night. Income swings from $1,400 to $1,900 because of tips. In a year you want to move out from roommates, which takes $2,000.

Training goal: Let savings happen without willpower

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Situation

1. The bank offers an automatic transfer. Which day?

The last day of the month
The day after payday
No auto-transfer, I will do it by hand

2. What amount, with income that swings?

$40 a week plus purchase round-ups
$400 once a month, to go faster
Round-ups only, no transfer

3. Your favorite band is playing, tickets are $90. You have $100 left for fun this month. The app flashes a button: "Skip this transfer".

Hit skip, once is fine
Skip the concert and sulk all month
Keep the transfer, pay from fun money

4. A great week: $150 more in tips than usual.

Spend it all, it is extra
Half of it, $75, straight to savings
Leave it on the card for a weak month

5. Six months in, $1,150 saved. What about the auto-transfer?

Raise it by $5 every six months
Turn it off, the goal is close
Leave it unchanged forever

What you will learn

Schedule the transfer for the day after payday.
The amount must survive your worst month.
Send half of every windfall to savings.

Your real-life step

Set up an auto-transfer for the day after payday, even $10 a week.

Questions and answers

How do I set up automatic savings?

In your bank app create a recurring transfer from your card to a savings account for the day after payday. Many banks also offer purchase round-ups.

Do round-up savings apps work?

Yes, but the amounts are small, often $15 to $40 a month. It is a good add-on to a regular transfer, not a replacement.

How much should I auto-save with an irregular income?

Set an amount you can afford in your weakest month, and move extra from good months by hand.

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More trainings in this module

Numbers are illustrative. A game, not financial advice.