Turning Automatic Payments into Savings (Video)
Written by Tangerine
Wednesday, February 25th, 2015
By now, everyone knows they shouldn’t spend every dollar that comes in the door if they can avoid it: you have to put a little away for the future. But why is it so hard to do?
Well, we tend to get used to habits and then forget about them after a while. This can help or it can hurt us. It helps us when we set up an automated savings plan: after a while, we forget about it, but the money keeps adding up.
It hurts us when we forget about all the automated monthly expenses that we have. Again, we forget about them after a while. If you’ve ever joined a gym and let the payments continue well after you’ve stopped going, you know the feeling!
So here’s a way to take advantage of bad habits to increase our good habits:
Make a list of all your monthly payments that are automated… from your mortgage… to your cellphone bill… to your internet service… auto and home insurance payments… utility payments… and anything else you can think of. To help you make your list, log in to your online banking or pull out all your debit card and credit card statements.
Now, take some time to see if you can reduce any of those costs. Maybe you don’t watch all 500 tv channels you subscribe to. So see if reducing your tv package can reduce your monthly bill.
When was the last time you shopped around for a quote on your auto and home insurance? You might find a company willing to provide you with the same coverage for 15% less.
Go over each automated expense and see if there is any way to get a better deal, either from the company you are already with, or from the competition. And if there are any expenses you can do without, even better: you might be able to get rid of a payment altogether.
Once you’ve found all your savings, the trick is to add up the new monthly savings and put that into an automated savings account – you need to “save the savings”, otherwise the savings end up getting spent!
Every dollar counts, so even if you’ve only found $20 per month, that’s $20 per month that’s now going into savings instead of being wasted. If that becomes a new habit, it’ll be worth thousands of dollars down the road.
The best part of this exercise is that you may not feel a difference, but your bank account will be bulging in no time. Why can’t exercising be more like that?