How to automatically put money in your savings account
Automating your savings can be a great strategy for reaching both short- and long-term savings goals. All credit unions and banks provide account features and services you can use to have your income directly deposited into your savings account.
Payments that can be direct deposited include employment paychecks, tax refunds from the IRS, and Social Security and pension payments.
After money is directly deposited into your savings account through an automatic savings program, which you create, you can move some of the money into your checking account to cover your bills.
In most cases you can set up your recurring savings plan to split the deposit, so a portion of your money gets deposited into your checking account and the remainder gets deposited into your savings account.
The goal of automatically moving money into your savings account is to make it easier to save money for a new car, save money for a home, save money for retirement, and build a savings account.
At Credit Union of Southern California (CU SoCal), we make opening a savings account easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.
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What does it mean to automate your savings?
Automating your savings means setting up automatic banking deposit features that let your paychecks and other earnings be deposited directly in your savings account or retirement account.
Automating savings also includes using your banking features to have money directly transferred from your checking account to your savings account.
Automating savings is a way of
paying yourself first ¾ contributing to your savings accounts (via direct deposits or automatic transfers) before spending your money on any unnecessary or luxury purchases.
Why automate your savings?
Here are the top reasons why it’s beneficial to automate your savings:
Stay on top of bills. Automating savings is connected to automating bill payments as well. When recurring bills, such as phone, cable, utilities, and other bill payments are automatically deducted, you won’t have to worry about missing a payment or late fees.
Reach short-term savings goals. If you’re saving for a vacation, a wedding, a new car, or a large purchase, having money directly deposited into your savings account helps your money grow.
Reduce debt. When your savings and bill payments are automated, you can track your savings and spending. If you have outstanding high-interest credit card debt, use your savings to pay-off debt. This is a smart move because credit cards cost more in interest than you’ll earn though a savings account.
Retirement savings. Deposits into retirement savings plans through an employer can be automated.
Save for college. Budgeting to set aside money each month will help your college savings account grow.
How to set up automatic savings
It’s easy to automate your savings. Here are some simple ways to get started:
Employer programs. Most employers offer direct deposit. If your employer offers direct deposit, you can choose the amounts you want deposited into your checking, savings, and retirement account (if your employer offers one).
Schedule recurring transfers. If your income is being direct deposited into your checking account, you can use your online banking features to schedule recurring transfers into your savings or money market accounts. If you’re unsure of how to do this, just call your credit union or bank branch for assistance.
Automatic savings apps. Check with your credit union or bank to see if they have apps to help customers automate savings.
What to do before automating your savings
Before you create your automatic savings program, here are some points to consider:
- Be mindful of overdrafts. An overdraft is when you withdraw or attempt to withdraw more from your checking account than you have in the account. Most financial institutions charge overdraft fees. Always be sure to keep enough money in your checking account to cover your monthly bills and expenses. Bills should always be paid in full before you start building a savings account. Whether you ultimately automate your savings or not, ask your financial institution about free overdraft protection.
- Consider the timing of transfers. Start by knowing when your bills are due and make sure you don’t withdraw money from your checking account too soon. If your bills are due at the start of the month, then you may automate your withdrawal of money into savings at the end of the month.
- Check with your financial institution. A quick call or visit with your financial institution is a great place to start learning about your automated savings and account features.
Where to put your savings
Once you’ve decided to move forward with automating your savings, you’ll need to decide which type of savings account to use. Here are some popular options:
High-yield savings account. High yield savings accounts have minimum balance requirements. If you can meet that minimum, you’ll be rewarded with a higher interest rate earned on your savings.
Money market accounts.
Money market accounts are a type of savings account sometimes called money market deposit accounts or money market savings accounts. Money market accounts are interest-bearing, meaning that interest is paid on the account balance.
Share certificates.
Share certificates are uniquely different from traditional savings accounts because they require money to be held in the account for a specific period (such as 90 days, six months, nine months, one year, etc.), and pay a fixed dividend on the account balance.
Learn more about share certificates.
Why savvy consumers choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
Get Started on Your Savings Account Today!