Why automation can be your secret weapon for saving more money

If you’re finding it hard to save, automated saving and payment settings can help.

As we all adjust to new routines and schedules, committing to regularly setting aside money for a savings goal can be hard. But even if it’s a small amount, continuing to save for as long as possible can put you in a better position to handle any potential financial challenge.

Digital tools that can remember to save money for you can help you stay on track during uncertain times. We spoke with Kimberly Palmer, a personal finance advisor at NerdWallet and self-proclaimed “big fan” of automation, about how to tap into this power.

For somebody who's just getting started automating finances, how should they prioritize? 

Kimberly Palmer [KP]: The first thing that should take priority is automating bill payments, because it's so easy to forget...and suddenly get hit with a late fee.

With credit cards, forgetting could trigger both a late fee and a penalty APR, which basically means the interest rate on your credit card can suddenly go up. 

This may also apply to other monthly bills you may have, like rent or a mortgage payment, a student loan, or a car payment. 

Okay, that helps protect me against payment charges. How can automation help me save money?

[KP]: Having a certain amount of your paycheck transferred into a dedicated savings account can help virtually any financial goal, large or small. You can focus on saving for things like a down payment on a house, an emergency fund, or a future trip you want to take. 

Even if you’re only putting away a small amount each month, when you check back a year later, you’ll see that, without even thinking about it, you'll have made significant progress. 

And check with your bank about budgeting tools that track your spending and alerts that can tell you when your balance drops below a certain level or if you have a debit of over a certain amount. 

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Looking to save money in a way that fits your budget? Money Scout can help.

It analyzes your spending habits, income, and upcoming expenses to find money that hasn't been used in your checking account—from $5 to $50—then moves it from your checking to your savings, automatically. The result: Small savings that can help move you toward your goals. Best of all, Money Scout can be found in The Hub—no new app required. To learn more, click here.

I’m worried about losing my job. Does it ever make sense to take a break from attempting to save?

[KP] Absolutely—that’s the rainy day that savings accounts are designed for. When you experience a loss of income, then you may want to temporarily pause your automatic savings transfer; because you may need to dip into savings rather than accrue funds for a short period of time.

In addition to pausing those automated savings, you can cut back on other expenses, such as entertainment spending, restaurant spending, and personal care costs. 

What else do I need to know about automating finances?

[KP]: After you set up automation, I recommend doing a brief check-in monthly to make sure your deductions look like what you expect. Then, once a quarter, do a deeper dive to see if you want to make any adjustments. 

The big bottom line is that devoting a little time to automation can save you time and money. It's definitely a great strategy to use to help you manage your finances.

 
Interested in automating your savings?
Enroll in Money Scout, a service that does more than automatically transfer funds between accounts. It analyzes your spending habits, income, and upcoming expenses to find money that hasn't been used in your checking account and then moves it to your savings, automatically.

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This digital service uses your spending habits to help find savings

Money Scout analyzes your spending habits, then automatically moves small amounts of money from your checking to your savings account.

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Kimberly Palmer, Interview, December 2019.

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Money Scout automatically schedules transfers from your selected checking account to your selected savings account. A money market account (MMA) cannot be a selected savings account for use with Money Scout. A scheduled transfer may be canceled before midnight ET on the day it is scheduled. Transfer amounts and frequency may vary and will reduce the money available in your checking account to cover other transactions. You are responsible for ensuring your checking account has sufficient funds. You may be charged overdraft fees if your account falls below $0. Subject to eligibility, terms and conditions, and other account agreements.

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