4 Reasons to Automate Your Savings

Canadians are spending more and more. The data backs it up. The Vanier Institute of the Family’s research reveals that the ratio of debt to income has been steadily increasing for the past 20 years, from 93% to 150%. The savings-to-income ratio shows the opposite trend, decreasing from 13% to 4.2%. Pretty heartbreaking stuff.

With debt easier than ever to build up, you’ll need to look for every opportunity to save.

Saving cash is critical for your current well-being and retirement. Here are four reasons that automating your savings is the best way to go.

Automation Helps You Spend Less of What You Make

You can arrange for your bank to transfer money into your registered retirement savings plan (RRSP) or tax free savings account (TFSA) every time you get paid. This means less money in your chequing account, and therefore less disposable income. Chances are you will be more cognizant of the money you spend and more frugal in your decision-making.

It Builds Your Emergency Fund

Setting up an automatic transfer from your chequing account to your RRSP or TFSA will also help build your emergency fund. Unexpected events happen all the time and automating your savings helps you deal with any costs that crop up during toughest of times. Please don’t be foolish enough to think you don’t need to set aside money just in case; everyone goes through his or her rainy day. Trust us on this one.

The Convenience Factor

You can have your automatic transfers done weekly, bi-weekly or monthly. You can pick and choose. Once it is set up, you will save a lot of time and hassle. Since it is automatic, you won’t even know about it, but cash will keep flowing towards your savings. You don’t need to worry about updating your paperwork, bank statements and going to bank in person, as everything is done automatic and online. This will save you a lot of time and mundane work.

Automation Makes for Guilt-Free Consumption

Saving money is no fun. Not compared to spending it anyway. And you can only be so frugal. However, when your savings are automatic you can spend the leftover money on something you really want or need without feeling guilty about it. It could be a new pair of soccer cleats, a new phone or maybe a nice dinner at your favorite restaurant. Knowing you’ve got the responsible part out of the way eliminates the stress and guilt of indulging.

The secret is to automate your savings as early as possible. The ability to set up an automatic savings plan is a financial gift to all humans. Take advantage of it.