What is automatic saving? Itís money you can set aside for funding your retirement, emergency expenses or other large expenses like a wedding, vacation or college fund. There are many strategies for automatic saving, including:
- Paycheck splitting
Many employers offer direct deposit for your paycheck. They may also offer the option to split your paycheck between more than one account. Consider having 15 percent of your income deposited directly into a savings account. Youíll hardly miss it, but itíll pay off for you in the long run!
Try setting up separate accounts for certain expenses, like an account to make your car insurance payment from or a separate account for mortgage to help you budget and save.
- Payroll withholding
In general, the more money you specify to be withheld from your wages throughout the year, the greater your tax refund may be because youíve overpaid the IRS.
Talk to a financial adviser to learn more about your options and what amount of savings you can afford. If your company offers to match contributions to your 401(k) plan, save at least the maximum amount that will be matched.