It’s America Saves Week, and today’s theme is “Saving Automatically.” I wish I could say that I automatically save! But the truth is that you have to do a lot to get yourself into a situation where you don’t need to do anything.
Like you may have, I have an automatic transfer from my checking account into my savings account. However, there are times when I can just as automatically transfer it back. My savings account does not offer me the traction I need because I have too much access to the money. It is really like a less convenient checking account.
One thing I have to done to curtail my spending is to use cash over my debit card. For instance, when I go out to have a few drinks, I determine how much money I am allowed to spend and put that amount in my pocket in cash. When the cash is spent, the night is over. Having the cash on hand and trading it for goods or services creates the realization of loss that keeps me from frivolously spending every dime I have. Studies have shown that when someone uses a plastic card for a purchase that same sense of loss is not registered, and that is why so many people can easily run up extreme charges or exhaust their coffers with a painless swipe.
Another recommendation for automatic savings comes from our own Bianca Blanco. Each week a portion of her check is deposited into an account for which she has no checkbook, no debit card, no access to the money other than to physically go to the bank and withdraw it. Needless to say, that money is never spent impulsively.
What steps can you take to save yourself from spending your own money impulsively? How can you make saving automatic?