This post is short, but makes up for it because this is the most important article on this website. If you only read one thing here, let this page be it.
You know the old expression, “Out of sight, out of mind”? Saving money is a lot like that. If you can have a certain percentage of your income automatically go towards savings, the battle’s already half won.
This extremely simple concept has been the source of dozens (or hundreds) of personal finance books. It’s a powerful tip, and it changes lives.
Do yourself a favor and don’t get up until you put this principle in action. You don’t have to get up to do anything — you can be good to go in the next 15-minutes, putting your savings on “auto-pilot”, changing your financial future forever.
How to Save Money Automatically (Forever)
You’re about to divide your bank accounts into two separate accounts — preferably at different banks. This will put the “out of sight” idea to work.
In the account you already have, keep money there for spending. Bills, groceries, movies — this is your spending account.
In the account you’re about to set up, keep money there for savings. Retirement, vacations, education – this is about to be your savings account.
How does this make savings automatic? Simple: you’ll simply have a certain percentage set to immediately be taken out of your main “spending” account every time you make a deposit.
You’ll never think about saving money again. It’ll happen whether you think about it or not.
How to Do It Right Now
If you have an email account, then you’re familiar enough with computers to get a special high-interest online savings account.
The best thing about online savings accounts is that they’re able to offer much, much higher savings rates than most “concrete” banks.
This is because they have less overhead, and are able to get more money from people around the world. It’s more efficient, and you make more money. The Internet has changed everything.
This is why you should set up an online savings account right now. Check out our review of the best online savings accounts. Here’s a quick recap:
- Money Aisle. Money Aisle often offers roughly 10x the national average. They let banks bid for your savings. That means they’ll automatically compare the online savings account rates from hundreds of banks — you’ll get the highest-interest savings account rate — period.
- ING Direct. (This is the one I use.) It works like a checking account, and saves like a savings account. The best of both worlds. 35,000 ATMs available. Free debit card for purchases. Free online bill pay. This is great if you want to have your money on hand at all times for emergency reasons.
- HSBC Direct. Put your money in a bank and make 5 times the national average. Or you can even get a CD, which is specifically made for saving — that’s at a 2.5% interest rate. This is some of the best I’ve seen.
Saving money shouldn’t be something that you have to think about. That makes it more painful and less likely to happen.
Making your savings automatic means you get the benefits of saving without the “pain” of actually having to consciously do it. You can’t afford not to save money. Make it automatic.