One of the great joys (yup, joys) I get from personal finance is watching our savings account grow. Many, many years ago, on paydays, when I found out we had some extra cash in our account, I tended to follow a spend first and save later strategy. Drinks on the patio after work and take-out food during the week were common expenses and savings occurred after my minor splurging. Only after all our fixed monthly expenses were paid (e.g., mortgage, Rogers bill, Enbridge gas bill, pre-authorized debits to RRSPs) and the bar tab was paid from Friday night fun, did we then transfer money into our savings account. We always had some discipline to transfer some money into our savings account every two weeks, but the amount fluctuated. Sometimes the amount was $50, other times it was more and some weeks it was less. Regardless, we knew every little bit counted. So, when it came to savings we did our very best to be consistent and stay the course.
Fast forward to the last couple of years…
Although my wife and I still enjoy the odd Friday evening out we don’t need to worry about transferring money into our savings account. This is because our bank does it for us – we set up our super simple automatic savings plan to ensure after 26 paychecks (every two weeks) my wife and I will have at least $2,600 in our high-interest savings account. I advocate (from our experience) setting up a bi-weekly automatic transfer plan with your bank is one of the best ways to save money. And it’s so simple. Whether its $25, $50 or whatever amount you can consistently commit to, after one year what may seem like small, slow drops in the bucket will add up to a pretty full pail of cash. The beauty of it all is – you probably won’t even notice the money has been transferred – it goes out before you have any chance to see it or burn it.
I promise you, if you get into the habit of spending only what you see (give or take) in your chequing account your “out of sight, out of mind” savings account will not only grow but you’ll be pleasantly surprised with the amount at the end.
Sometimes, just getting started with a savings plan is the hardest part. There will always be a temptation for you to stop the transfers. I feel it every now and again myself. Same goes for my wife – those shoes at Winners are always calling her name! But on a serious note, if you can budget an amount to transfer and have some discipline to stick to it, you’ll be rewarded. We plan on using most of our savings to take a great trip this fall. We’ve already paid off our flights – so we’re halfway there. You could likely have your own getaway too with your own super simple automatic savings plan.
Do you have an automatic savings plan? If not, how do you save?