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Automate Your Savings 9 Easy Ways

Automate Your Savings 9 Easy Ways

Daily bombardment by one-click shopping ads and an ever-present temptation to spend can make saving money challenging. Boost success and automate your savings with these nine easy steps:

1. Earmark income for investment.

Whether it’s babysitting money, all of the coins you receive in a month, or a portion of your regular paycheck, designate certain funds for savings and investments. Identify an account to funnel these earnings into and deposit them into that account immediately. No amount is too small; your savings will grow quickly through the benefits of compound interest.

2. Save your tax refund.

Looking for a lump sum to get started in the savings game? Save your tax refund, and pledge to do so every year. If your savings account already contains 6–12 months of emergency expenses, consider plugging your tax refund directly into your IRA.

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3. Regularly deposit into savings.

Automated deposits are easy and effective because they take money directly from your paycheck and put it where you need it – into a savings account that contains enough to cover at least six months of living expenses or foreseeable emergencies, preferably a year’s worth. If your savings account is already plussed up, reroute your automated deposit into investment accounts, such as mutual funds or IRAs. Contribute to a Health Savings Account or college fund if appropriate; or continue to build savings as you work toward a large investment purchase, such as a house or land.

4. Split your direct deposit.

If your employer offers direct deposit, ask if they will accept multiple deposit accounts. If they will, put some in savings and some in checking. If they won’t, set up a recurrent transfer on your pay day. Though they are both liquid, thanks to online banking, we tend to have a greater psychological resistance to spending money from our savings accounts.

5. Favor interest-bearing accounts.

Once you’re saving, make those accounts work for you! Do your research online, or call up a bank representative to learn which accounts bear the most interest at your institution. Often something as simple as keeping less in your checking, which typically has a low interest rate due to the fluidity of the account, and more in your savings, can result in larger gains over the course of the year.

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6. Use a cash-back credit card.

When you spend, do so with a credit card that earns you cash back. Like any credit card, remember to treat it like cash, buying only what you can afford at that moment and paying it off regularly.

7. Household accounts.

Some banks offer incentives for “house holding,” or consolidating checking, savings, investment, insurance, and other accounts at the same bank. Others offer cash incentives or higher interest rates to those who meet a certain threshold of net investment with the bank. This is free money, so it’s worth a call to your bank to find out if they offer such a program, or shop around for a bank that does.

8. Know your bank’s rules.

Some banks charge a fee after a certain number of transactions between checking, savings, and/or investment accounts per month, or cap the amount of money that can be transferred in a single transaction or 24-hour period. Know your financial institution’s rules, and plan accordingly.

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9. Automate bills.

You can’t accrue wealth if you are always being hit by late fees. Keep the lights on, and save yourself the cost of all those stamps, by automating as many payments as you can. Once you have a cash-rewards credit card, paying bills from your card can increase your benefits even more.

 

Want to save more money? Check out these 55 Practical Ways to Save Money Efficiently.

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Featured photo credit: 401(k) 2012 via flickr.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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