Automatic Savings Plan

Saving money is certainly a responsible step towards your financially stable future, and most people have some sort of a savings plan and method. The ways of saving money are numerous. You can set aside a part of your income and save it at home as cash Also you can do the same but store the money in a bank account. You can either save a certain amount of monthly income on regular basis. If you get a lump sum of money, you can save it for a rainy day or for some specific purpose in future.

Although saving money is basically simple, there are people who do not find it very easy. The problem is that they cannot set aside the predetermined amount of money every month, because they simply do not know how to save. Still, everyone needs a “safety net” in case anything unexpected happens, and there is no other way to provide it than by saving.

For those who are not disciplined when it comes to saving, the ideal solution is automatic savings plan. It works in a way that you determine a specific amount of money to be transferred each month from your checking account to a savings account. This kind of savings plan is usually used when you receive a stable monthly income on a checking account, such as your monthly paycheck.

You should determine a certain sum of money which will be deducted from your income every month and transferred into your easy-to-access savings account. It is generally intended that people see this amount of money as an obligatory monthly expense and not to use it for any purposes other than saving. Usually, not large sums are set aside for such plans. It is enough to transfer as little as $50 a month, and you will have $600 after one year.

Automatic savings plan

An automatic savings plan is usually not used for long-term savings, such as saving for college, retirement or home purchase. It is usually viewed as a financial backup in case of an emergency, such as job loss, medical bills or any other unexpected situation that may occur. However, if you manage to cover all the expenses, even the unpredictable ones, without using the money you have saved, it can grow into a very large sum over the years and you can even use it for some larger purchase or investment. Additionally, it is possible to create an automatic savings plan so that the money is transferred from your checking account into a bank IRA, 401(k) account or any other account intended for long-term savings.

Setting up an automatic savings plan is easy, and depending on the bank where you have the accounts. You can sometimes do it yourself through online banking. It is necessary to have both the checking account with regular income, and the savings account to which you will transfer the funds. Automatic savings plans are quite flexible. So you can choose the amount of money to be transferred, how often you want it to be performed, and you can even adjust the amount in case your income increases or decreases. All in all, this is a savings method suitable for anyone, and it can be used for multitude of purposes.