Errands multiply like daisies in the spring – only they’re much less beautiful. You spend hours running here and there trying to keep your life in order, only for all those ‘small’ errands to take over.
Once upon a time, maintaining your wealth was part of that endless list of errands. But if you’re still taking care of your savings manually, we’ve got some great news for you.
Taking advantage of the various automations available to you will not only free up your time to do more enjoyable endeavours, but it can also help you grow your wealth faster. Once you’ve properly automated your wealth, you can trust your system to meet your wealth goals, without worrying about missed payments or the temptation to spend.
We’re going to walk you through three major ways you can automate your savings. And, as an added bonus, we’ll show you how to avoid the main pitfall from automation: forgetfulness.
1. Start with your pay cheque
If you get a regular pay cheque, the easiest way to automate your savings is to opt for payroll deductions. Depending on your employer, and what they offer, there are a couple of ways to do this:
- Opt-in to your company’s retirement plan. If your company offers a retirement plan, opting in allows you to save without thinking about it. If your company offers to match contributions, make sure to put in the maximum amount they’ll match up to, as long as you can afford it.
- RRSP deductions. If your employer doesn’t offer a retirement plan, that doesn’t mean your automation options are over. Instead of sending your automatic deduction to a group retirement plan, set up a monthly, automated investment to your own personal RRSP.
Once you have your contributions automatically deposited, it takes much of the stress of saving off your shoulders. In fact, after a few months, you’ll have re-configured your spending habits and you (probably) won’t miss a single cent from those investments.
2. Automate your savings increases
It’s great to automate, but if you forget about your savings for too long, they won’t keep up with your salary. By automating increases into your savings, you will grow your savings along with your career.
To do this, check with your company to see if they will allow you to automate an increase in your contributions each year. If they do, make sure you take advantage of it. While more is usually better, an increase of at least 1% per year is a good place to start.
If your company doesn’t offer a retirement plan, you can set up auto increases with your individual investment plan as well.
3. Utilize automatic transfers
Automatic transfers set up a whole rainbow of possibilities for your savings. While automatic deductions from your paycheque will take care of the biggest one (retirement), automatic transfers can help you save for your other goals.
All it takes is a few easy steps to make automatic transfers work for you:
- Set up a savings accounts for each of the goals you are saving toward – i.e. a downpayment for a house.
- Set an amount and a timeline for each goal. This will show you the amount you need to deposit monthly.
- Set up automatic withdrawals in that amount to each of your accounts.
This also works for investing money into RRSPs, RESPs, or other savings accounts.
By allowing automation to work for you, you can be confident that you’re moving towards your financial goals, even when you’re focusing on the million other things on that list of errands.
The main pitfall of automating
Automation is a powerful tool, which means properly used, it is incredibly helpful. But, that doesn’t mean you can simply set it and forget it.
Life changes, which means some automations you set could soon become obsolete, or ill-fitting for your goals. To ensure this doesn’t happen, it’s important to review your finances on a regular basis.
When reviewing your finances, look for:
- Financial windfalls (i.e. inheritance) that may not have made it into your savings.
- New means of income that could be utilized to grow your savings.
- Any income growth that hasn’t been reflected in your savings.
Technology can help here too
Personal finance software can help you keep track of your automations. This is important, both in keeping your automations up-to-date, and reminding you that the money in your account is sometimes spoken for.
Automation makes saving easier
Automation is a great tool to make saving easier while keeping your wealth growing. With proper use, it can make a huge difference. Follow these tips, and you’ll be well on your way to automating your growing wealth!
For more advice on how to make the most of your savings, contact Bayview Financial Today.