Automate Saving

Mike Cashion, MFF Director of Operations

By: Mike Cashion, MFF Director of Operations

We are human

As humans, we like to think that we are actually superhuman. We like to think we are beautiful, smart, strong, and can remember everything. The first three might be true but the last one is definitely not. Our memory is short, we live busy lives and so much is competing for our time, energy and resources. It is ok to be human. There are so many tools available that make us look and feel like we are superhuman.

Saving really is important

I’m sure this thought crosses your mind often: “I will get to it tomorrow.” Tomorrow becomes Friday, then next week, then next month, then next year and then it never happens. It would be cool if money grew on trees after we retired. Then we would not have to worry about saving for retirement. This is not the case. We really need to be actively saving now. That way, we can live a reasonably comfortable lifestyle when we reach the age of retirement or are no longer working. If you do not save now, you might not ever reach that point of being able to retire because you will be forced to continue to work or live a challenged lifestyle later in life.

What should I do?

There are a number of ways to “set it and forget it.” This means that saving will happen without you needing to make a conscious decision and take an action every time that you would like to set aside some money for the future. If you needed to save $1,500,000 in the next 35 years, you would probably need to make many individual decisions to move money into savings to reach that goal.

Here are a few simple ways to get started:

  • Direct Deposit
    • Reach out to your HR Department at work to update your direct deposit.
    • Decide how much or what percentage you would like to set aside each time you are paid.
    • Direct deposit this amount each pay period into a special savings account.
    • Once the form is filled out, you will not have to do anything, unless you want to change the amount in the future.
    • Note: If you work for yourself or are a contractor, consider an automatic transfer from your checking account into a savings account on the 1st of every month.
  •  Participate in your Employer Sponsored 401(k) Program
    • Reach out to your HR Department at work to see if you qualify to participate and what the employer match is.
    • Decide what percentage you would like to contribute from each pay period. (If the employer matches up to 3%, 5%, 7% or etc, contribute up to the match. It is free money from your employer to help you save for retirement).
    • Read the options. If you don’t understand the paperwork, don’t be afraid to ask questions or contact the company that services the 401(k). Often, they have Certified Financial Planners available to go over the paperwork and talk about your unique situation. That way you can pick the right mutual funds / plan that will work well for you.
    • Note: If you work for yourself, are a contractor or your employer does not have a retirement plan, don’t worry. Take a look at opening your own retirement account such as an IRA. Do a little research first to understand what might be the right IRA for you.
  •  Explore other tools out there
    • There are many, with all of the investments into the FinTech space!
    • Do a little research and find a tool that will automate your savings, while also meeting your long term retirement needs.
    • Recently, I have been trying out Acorns. It is a great way to automate savings without having to think about it. Basically, everytime I use a particular credit card, acorn’s will round up the transaction to the nearest dollar. Once my roundups reach $5, acorns will transfer $5 from my checking account into a retirement account I have with them.
    • Note: I do like this tool but it equates to a small portion of the overall amount of the retirement savings that I will need in retirement. So I have to save in other ways as well. Read my recent post on the Pros & Cons of Acorns HERE!

Learn More

Here at MFF, we are all about empowering people to make money work for them. We offer a variety of online courses, blogs, events and more! Like what you saw here? Sign up for our flagship program, the Standards of Financial Literacy, HERE!

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