Economists Say This Easy Savings Plan Is One Of The Best

When it comes to savings, finding easy strategies to make your finances seem effortless can go a long way. According to economists, one of the best strategies, especially when it comes to padding a savings account, is to automate your contributions. For example, dollar-cost averaging is a form of automating your finances and has been proven to lead to serious gains in the stock market. 

Sometimes referred to as a "set it and forget it" approach, automating your savings works by creating a recurring transfer from one account into a dedicated savings account, like a high-yield account with higher return rates. While it may seem simple and counterintuitive to saving more money, automating your finances ensures you remain consistent in reaching financial goals and can even help with budgeting for other expenses. While automating your savings and investment can lead to good outcomes, applying it across your finances creates a robust system that can make managing your money much less stressful. It's also a way to save money without sacrificing quality of life.

Automating your finances can take some work since it may require building up a checking account to prevent overdrafts or bounced payments. However, if achieved, it creates a system that can reduce stress and help you achieve your finance goals. Because the system can automate transfers and payments, as long as you have money in the right account, you won't stress about due dates, writing and mailing checks, or logging in to different online platforms to make a payment. 

As for helping with your goals, using a set it and forget approach removes some human behavior from financial decisions. For example, if you schedule automatic payments or savings transfers on payday the funds will seamlessly transfer without human intervention, and it could reduce anxiety or temptation to splurge. By removing emotion out of personal finances, you can also avoid emotional biases that may derail your goal otherwise. This can include things like not investing in the stock market because of fears of a downturn or procrastinating on starting an emergency fund because it can feel overwhelming. It's a simple way to trick yourself into saving money.