Six ways to put your saving on autopilot and pay yourself first

In his latest personal finance column for CTVNews.ca, Christopher Liew explains how automating your savings and paying yourself has never been easier, thanks to the digital banking tools and apps that are out there (Getty Images / Bussarin Rinchumrus)

In our fast-paced world, saving money can feel like an uphill battle.

This is especially true when paired with ever-increasing costs of living and the hundreds of ads that bombard our eyes every day, encouraging us to keep spending and consuming.

However, thanks to digital banking, automating your savings has never been easier or more effective.

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Once you put your savings on autopilot, you’ll begin to see the benefits of slow, steady, compounding contributions, without even having to think about it.

Below, I’ll share some of the most effective (and simple) ways to automate your savings.

Start saving more with these 6 ideas

If you’re starting from the ground up and have little to no savings, the idea of one day having an emergency fund of $5,000 to $10,000 may seem daunting.

That’s why it’s important to break these larger goals into smaller, more achievable milestones.

For example, let’s say that your goal is to create an emergency savings fund of $10,000 in 12 months. Here’s how that looks broken down into smaller steps:

• $833 saved per month
• $192 saved per week
• $27 saved per day

Realistically, many people spend $20 to $30 per day simply eating out between breakfast, coffee, snacks, lunch, and dinner. Therefore, the trick to saving as much as you already spend without thinking about it is to automate it to the point where you don’t have to ever think about it.

1. Set up direct deposits from your paycheque

One of the easiest ways to automate your savings is to work with your employer and have them deposit a portion of your earnings into your chequing account and a separate portion of your earnings into a savings account.

Most employers have a direct deposit form that you can fill out, allowing employees to set a predetermined amount or percentage of their cheque to go to multiple accounts.

2. Use round-up apps and programs

There are several apps and programs you can enroll in that will automatically round up purchases made from your debit or credit cards to the closest dollar.

For example, if you spend $14.37 on your morning breakfast, the purchase will be rounded up to $15.00, and the remaining $0.63 will be deposited into a savings or investment account.

This may not seem like much, but over the course of 365 days, this extra $0.63 saved every day would total up to $229.95.

3. Set up weekly transfers between accounts

If you’re a freelancer, self-employed, or own your own business, you may not have the option to divert a portion of your paycheque to a savings account and may rely on one account where you receive direct payments.

In this case, one of the easiest ways to automate your savings is to open a savings account (see more on this below) and set up weekly or monthly transfers from your main earnings account into your primary savings account.

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4. Take advantage of employer-sponsored savings plans

Many companies offer employer-sponsored savings plans to encourage their staff to set aside extra money for the holidays or to help them through slower months. In some cases, employers may even offer to match a certain amount of what their employees have saved.

Check with your HR department or manager for details, and definitely take full advantage of any amount that your employer is willing to match.

5. Start a change jar

Okay, I’m going to go really old school here.

I know it may sound a bit corny, but the age-old change jar method really does work, especially if you frequently take home cash tips and earnings.

All you need to do is designate a bottle, jar, or otherwise hard-to-access container as your savings jar and commit to throwing extra bills and change into it at the end of each day.

I did this one year and saved over $800 without even realizing it until I broke the bottle open at the end of the year.

6. Employer-matched RRSPs

Investing in a Registered Retirement Savings Plan (RRSP) can be a good option to help you save money for retirement. Although RRSPs may not offer quite the same advantages as investing in a TFSA, many employers are willing to match a percentage of the earnings you contribute, up to a certain amount.

If your employer is willing to match your RRSP contributions, this can be a great way to take advantage of free money contributed to your future, that you otherwise wouldn’t have.

Automate debt repayment and investing

Putting your savings on autopilot is an excellent way to reach your emergency savings goals without ever having to think about it.

Automating debt repayment and investing are also great ways to pay off debts and grow your investments.

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Setting up debt payments to auto-draft out of your account is a great way to limit the stress caused by staring at your debts in the face every month when you go to pay them off.

Most investment platforms also allow users to transfer set weekly or monthly deposit amounts into their investment accounts, allowing you to compound your growth over time.

Ultimately, it all comes down to simplifying the way that money goes to the right places. We all know just how easy it is to spend without thinking. Let’s make it just as easy to save.

Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.

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