Does it seem difficult to start saving? Saving money for the future can be challenging whether or not you have a savings goal. However, all responsible consumers should have some savings on the sock in case of a bad day. This article explains how to start automatic saving. We also justify why it could be a good option especially for beginners.
Purpose of automatic saving
Everyone knows that saving money is smart stuff – but what’s the point of automatic saving? Automatic saving can be a really effective saving method for people who find it difficult to motivate themselves for long-term savings goals. While consumer credit, for example, can provide great help in certain situations, it is also worth considering saving in advance, if at all possible.
Imagine that you have a choice of either a long formula dinner with good friends or a movie at home with a pop bowl. The price difference between the two options is at least 50 euros, but most people find it difficult to refuse a dinner party, especially if the motivation is to save money.
We people are motivated by the so-called immediate satisfaction of needs. We want something right away, and our patience is not enough to wait. This is what makes saving psychologically challenging. However, automatic saving makes it less likely to succumb to temptation. It offers no options.
AutoSave – How Does It Work?
Automatic saving can be planned in many different ways. Many Finnish banks have introduced their own system in their online banking, the purpose of which is to make saving easier for customers. Automatic saving means that, according to the customer’s settings, a certain amount of money is transferred from the user account to the savings account without having to make the transfer manually.
Small saving or micro saving
Micro-saving became small in Finland a few years ago. It is a savings method in which, using certain cards, you get a certain amount of money into a savings account or fund for every euro you pay. There are usually two different options for this type of saving:
- Transferring a fixed amount from a current account to a savings account each time the card is used
- Rounding the purchase price up and transferring the difference to a savings account
Fixed Monthly Savings
Saving a fixed amount each month is the most traditional form of automatic saving. In this case, the bank automatically transfers the agreed amount from the customer’s current account to either a savings account or a separate investment account. The customer can determine the amount to be transferred and the money can be withdrawn from the account at any time.
applications
Applications have become widespread at a sluggish pace in the financial world. There are also several applications available in Finland, the purpose of which is to help users achieve their savings goals. This can be a great solution for those who need a little extramotivation in a task to succeed.
Advantages and disadvantages of different savings models
If you have decided to try automatic saving, it is important to choose the most suitable saving model for you. The most practical option may not be the best option. Think about what motivates you. Which savings method is likely to work best for you and help you avoid wasting your savings on unnecessary things?
Each of the three strategies mentioned above has its own advantages and disadvantages.
Small savings or micro savings are convenient for people who use a lot of cards. However, it makes no sense to join such an agreement if you know in advance that the card will not be paid for very often. Months pass quickly. If saving is really going to be a priority, then we also need to make sure that the money stays on the sock at a steady pace.
If you don’t have a habit of spending money at a fast pace or spending large sums at once, it may be wiser to specify a fixed amount that will be deducted from your account on a monthly basis . It is also a very predictable savings method that helps you know exactly exactly how much your savings account will accrue each month. This can be a convenient option when the budget is tight and predictability of the private economy is important.
Savings applications are useful, for example, when you want to monitor your savings on a regular basis or when you need help setting savings goals. Savings applications motivate you to save little by little and you can use them to monitor your savings.
Most applications are linked to online banking. On the other hand, such applications can also make saving more complex than what it really is, which is good to be aware of when deciding which automatic savings plan to choose in the end.
Good applications and services for automatic saving
Dreams
Using Dreams begins with creating a dream. Next, it becomes a savings target. The app offers a variety of practical options to save money. This could be, for example, not buying a cup of coffee, packing lunch for work or canceling a shopping day. Dreams utilizes the principle we described earlier – immediate satisfaction of needs – and makes saving sensible and fun.
spiff
Spiff works with BN Bank to provide a savings account in the form of a practical application for automatic savings. You will receive 1% interest on your savings deposited through Spiff, and there may be multiple savings projects underway at the same time. You can save either alone or with others. The application is flexible with regard to the amounts to be deposited.
Saver (S-Bank)
Banks also have their own services for micro-savings and automatic savings. For example, S-Bank’s Saver application is one of Finland’s first micro-saving services. As a result, each card purchase brings the euro to the user’s savings account, from which the Saver uses the funds for investments.
How to stop using savings continuously?
Finns save far too little for a bad day. Everyone should strive for some form of automatic saving, but there is a great temptation to tame it. The bigger your savings account grows, the more you can theoretically afford it and the harder it can feel to leave money alone. Here are three tips to help you save money.
Create a usage plan for your savings
We are constantly tempted in our daily lives. If you have accumulated a decent amount in your savings account, it may seem challenging not to withdraw it. It is important that you work for all your savings. When you feel that you have earned every penny accumulated in your savings account through hard work, you will consider the possible use of the money in more detail.
Create challenges for yourself
If it takes a total of 30 seconds to log in to online banking, transfer money from a savings account to a current account and withdraw from a card, creating an automatic savings plan is just as empty. Make sure you make accessing your savings account as difficult as possible. For example, you can set a monthly limit on the number of transfers that can be made between your accounts.
Set goals
When setting savings targets, it is also essential to draw up a savings plan. What do you want to save for? Why is it important to you? Is there a dream trip in your dreams? Are you trying to get rid of your debts? Have you been dreaming of something else for a long time? Whatever the goal, motivation is a powerful tool for automatic saving to retention.
