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Putting your savings on autopilot mode goes a long way in creating a suitable corpus for your financial goals. Here are five reasons why automated savings are recommended.
With increasing digitization, automation has become a common norm, and automating your savings is no exception. That's why you should automate your savings, especially in today's digital world. Just as you put your clothes in the washing machine and push a button to get them washed and even dried, automating savings can simplify the process of building your financial future.
By adding a biller to your bank account, your bills are paid automatically as they fall due. Similarly, setting up automatic transfers from your checking account to a designated savings account can ensure that a portion of your income is being saved consistently. In this article, we'll explore the top five reasons why you should automate your savings for financial freedom.
Automating savings also has multiple benefits. Here are the top five reasons automated savings are the right way towards financial freedom.
1. To create a disciplined savings approach
When you automate your savings, you create a disciplined investment approach. Whether you do it weekly or monthly, you can start setting aside some income towards savings.
When you are disciplined, even small savings have the potential to accumulate into a considerable corpus that helps meet your financial goals.
As a popular saying goes—slow but steady—automated savings work on the steady aspect of the saving. They allow you to save steadily towards a financial corpus for goal fulfilment.
2. To avoid forgetfulness, or worse, procrastination
When asked why households don't save up enough for their goals, the two main culprits are forgetfulness and procrastination.
People either forget to save or put it off until a later date. The everyday demands of life take up all their time, leaving people with limited or no time to plan to save.
Many people save haphazardly or do not save at all. The result is a lack of an optimal corpus for meeting life's financial obligations.
A simple solution to tackle the problem of forgetfulness and procrastination is automating your savings.
When you put a mandate on your bank account to debit a part of the balance towards regular savings, you take forgetfulness and procrastination out of the equation. The bank regularly debits your account, as directed, and channels the amount to an investment avenue selected by you.
This ensures that your investment is regularly fueled with additional savings to grow into a decent corpus for your goals.
3. To allow compounding to do its wonders
Do you know how compounding returns work?
Compounding returns help you earn returns on already earned returns. Confused? Let's simplify.
Let's say you invest Rs. 10,000 in an avenue with an annual return of 8%. In the first year, you earn Rs. 800. In the second year, the return of Rs. 800 is added to your investment of Rs. 10,000. Then, you earn interest on the collective amount of Rs. 10,800. So, in the second year, you earn a return of Rs. 864, Rs. 800 on Rs. 10,000 and Rs. 64 on the last year's return of Rs. 800.
In subsequent years, the previous returns accumulate with the investment, and you earn higher returns.
Automated savings can be a major catalyst for compounding to work its magic. When you save regularly, you start earning interest on your investments. Regular savings mean regular returns, and your returns grow.
For example, take two instances. In the first instance, you invest Rs. 2000 every month for a year. In the second instance, you save Rs. 2000 in the first month, Rs. 3000 in the sixth month, and Rs. 7000 in the 9th month. Let's check the returns in both these instances when the assumed return is 12% annually.
As you can see, as you save regularly, you end up earning more than when you invest randomly.
4. To resist the temptation to overspend
Overspending is a curse that eats up your income and leaves nothing to save.
If you overspend, you might suffer a financial strain in meeting your financial needs. Moreover, you are left with nothing to save.
This can be countered with automated savings. When you set the date of the savings to coincide with the date that your income is credited to your account, you can save first and spend later.
As your income is diverted to savings, you can resist the temptation to overspend.
This also brings discipline in managing your finances and makes you responsible with money.
5. Simply because it is convenient
Let's face it. Automating your savings is not only financially rewarding but also convenient.
You don't have to worry about thinking about how and where to save or about when to save. No manual intervention is needed as the savings happen automatically.
You are at ease while your financial planning is a step closer to goal fulfilment—that's a win-win situation!
Automation has numerous benefits, whether it is your home appliances, gadgets, car, smart home solutions, or even financial transactions and savings. Automation gets the job done, requires minimal effort, is convenient, and saves time.
As you are busy tackling the stress of everyday life, do not let your financial goals suffer. Make your money work as hard as you do. Save money daily, automatically, and build wealth. Automate your savings and inculcate the habit of disciplined savings regularly so that you can save small and affordable amounts and still create a good corpus that will take care of your financial goals.
If you want to automate daily savings, choose the Jar app. An automated savings app, Jar allows you to save small amounts, starting at Rs. 10. What's more, you can also invest your regular savings into digital gold and create an asset. Use the daily savings app Jar and start your saving journey in a few clicks with a simple daily savings plan!