Automating Your Saving Habits

I don't know about you, but I have always been a terrible saver. That was more of my meticulous brother's bailiwick, and I admit...a part of me has always been envious. When we were kids, I struggled to buy the big, satisfying things in life, but my brother used his allowance and then, summer jobs, to buy himself a TV, Nintendo games, and other expensive items of teenage desire.

That's why I am so glad there are tools out there to create a structure of saving for people like me!

One of the best, most successful ways that I've been able to save money...is to use my bank account! Almost two years ago, I moved our personal bank account to a local credit union. I do have to recommend credit unions, and that's for another post, but one of the benefits of this was finding out about the flexibility of moving my money around.

My husband's paycheck comes into our account by direct deposit - in other words, automatically. Most employers now offer this, and there's a lot of reasons to take advantage of it. For instance, knowing exactly when your money will be available to you is great. But my credit union also allows me to automatically take money from that transaction, and put it into interest bearing savings sub accounts.

The first thing I did was create a Christmas Club subaccount. My credit union advertised this on their email list and I thought, it's time I started thinking about more ways to save. So, when the paycheck hits the account, it's already had the money deducted and I never really see it as "active" money, and stop thinking about spending it. Once a year in October, the bank allows me to transfer that money, without a withdrawal penalty, back into my checking account to use as I see fit (presumably to buy my beautiful nieces Christmas gifts!).

That was so successful, and I didn't feel the pinch of the "missing" money, that this year I've decided to expand that to another subaccount for general savings. With the general savings account, there's no penalty to withdrawing from it. So now, every paycheck puts a little away into the Christmas Club, and another, slightly larger amount goes to the general savings.

The key for me is to consider the savings subaccounts "off-limits." That's easy with the Christmas Club which has a penalty for early withdrawal, of course. But I don't even often look at the balances. That's not to say I haven't dipped into the general savings, for instance when my old car needed some major work. And it's been hard to keep up the balance because of these emergencies, where I either have to use my savings, or else pay by credit card with high interest rates. I have not yet been able to achieve the "three months' living expenses" savings balance that the experts recommend.

However, I'm always pleasantly surprised after a few months how the savings balance has grown. Of course, the interest rate isn't making me rich, and we're still talking about modest sums of money, but it's certainly a lot more than I've been able to do on my own. And my bank gives me the option of creating as many savings "subaccounts" as I want. If I am saving up for a remodel on my house, for instance, I could create an account labeled as such, and move a set sum of money into it on a regular basis, or based on a transaction like the paycheck deposit.

Check with your bank to see if you have this flexibility. Many, if not most of them offer this. If yours doesn't maybe it's time to consider switching - and I do recommend a non-profit, customer-owned credit union. At my bank, they don't even make you "open" another account - it's all under the same account number. This helps in managing everything, so you don't have to keep track of multiple accounts, or go through the hassle of closing a savings account when you're done with it.

Good luck, and happy saving!