Keep these tips in mind when you’re planning a home office:
- Be sure it’s ergonomically correct
- Find the optimal location
- Consider used office furniture
- Incorporate lighting, plants and sound
Saving money may not feel like your strong suit. It’s easy to get off track and save less than you intended when you’re not consistently saving a portion of every paycheck. But that doesn’t mean you can’t get ahead of the savings game. Automating your savings could be just what you need to get your finances in tip-top shape to ensure you reach your savings goals.
Whether you get paid every two weeks or on a monthly basis, you may have a hard time regularly setting aside money for a savings account or even a retirement fund. Many people fall into the habit of saving only what is left over after paying their living expenses and covering the cost of discretionary purchases. The challenge here is that you likely won’t have a consistent amount being deposited into your savings account every paycheck, which means your savings contributions will be… at best …fairly unpredictable. If you fall into this camp, now may be just the time to automate your savings.
Automating your savings can turn your savings deposits into another monthly expense. This can help you prioritize your savings contributions, reducing the temptation to spend those funds without planning ahead. When you automate your savings, it’s easier to ‘pay yourself first’ when that paycheck comes in, explains Beverly Harzog, credit card expert and author of The Debt Escape Plan.
“Having it automated makes sure that you don’t forget to make the deposit into your savings account,” she says. “It’s like making a commitment to building an emergency fund.”
Not sold yet? Some other benefits of automating your savings include:
There are several ways to automate your savings. It all starts with setting a realistic savings goal by calculating how much you can reasonably afford to save each month, Ouyang says. “Once you have a grasp of your own finances you can decide how aggressive you want to be with your savings goal,” he adds.
If you already have a bank and want to automate your finances, you can simply set up an automatic deposit for your savings account from a checking account or other deposit account. If your employer offers direct deposit, you can avoid a pit stop in checking and have a portion of your paycheck deposited directly into your savings account.
When picking an account for your automated savings, Harzog says to keep fees, including one charged for monthly maintenance, top-of-mind. “These are sometimes waived if you keep a minimum balance in your savings account,” she adds. Account fees can eat into your savings goals, so it’s best to use accounts that don’t have monthly maintenance fees, like some online savings accounts. Always be sure to keep tabs on any minimum balance requirements, and look for ways to avoid bank fees.
If you want to be consistent with your savings contributions when you automate your finances, start small and then increase the deposit amount when you feel confident that you can set aside more.
“Perhaps start with only 5 percent of your paycheck,” Ouyang says. “Then, at the end of the month, increase that amount by 1 percent until you are satisfied with your monthly savings goal or reach a target that fits your budget.” Ouyang recommends aiming for 10 percent of your paycheck, or as high as 15 percent if you want to be really aggressive with your saving.
When automating your savings, it’s also a good idea to be flexible with the amount you deposit. Even though you’re going into this with a ‘set it and forget it’ mentality, a positive change in your financial situation, such as a raise at work, means it may be time to modify the amount you send to your savings account each month.
Finally, be sure to track your progress after you automate your finances. It can be satisfying to see your savings account grow each month once you automate your savings. Keep tabs on your running balance and avoid the temptation to ‘cash out’ before you reach your bigger goals. If you are making deposits toward an interest-bearing account, you’ll also want to avoid making withdrawals so you can capitalize on compound interest.
Automating your savings can make money management—and reaching your savings goals—that much easier. Take the time to set some realistic goals and choose a monthly savings contribution you’re comfortable making for at least a few months. You’ll find it easier to adjust your spending to accommodate for this expense and will be building up that savings account with minimal effort.
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