How to automate your savings for financial success: A quick guide

Financial success is paramount for achieving the larger goals you may have in life. By attaining financial stability, you can progress in life by fulfilling your dreams and desires, such as owning a house and maintaining a comfortable lifestyle.

While hard work and consistent effort are essential for achieving financial success, several strategies can aid you on your journey. Automating your savings can significantly contribute to your financial goals by helping you maximise savings consistently. Savings automation also enables you to track spillages in your monthly expenses and divert that amount to savings.

Planning your savings

If you are a salaried employee, you should start planning your savings even before you receive your pay cheque. You can achieve this by setting up savings automation for several schemes. You can plan automated savings in investment instruments across categories from mutual funds to fixed deposits and retirement plans.

The salaried employees can also opt for the Employees' Provident Fund (EPF). The EPF scheme is managed by the Employees’ Provident Fund Organisation (EPFO) and offers an assured return. The interest rate for the scheme is fixed by the government periodically. The scheme has been designed to help salaried employees to build a retirement corpus and to ensure a pension payment after retirement. Your contribution to the EPF is deducted before you receive your salary and an equal amount is contributed by your employer.

Invest in a high-interest savings account

To increase your savings, consider high-interest savings accounts. Some banks offer savings accounts with attractive interest rates. You might want to switch banks if your current account does not offer competitive rates. Additionally, you could look for a bank that charges lower fees for account maintenance.

Use automatic savings tools

Automatic savings tools can also help you increase your savings. Various apps are available that auto-debit a fixed amount from your account and deposit it into a savings instrument you choose. Moreover, many banking apps offer an auto-deduct facility for monthly investments in Recurring Deposits, which can generate recurring savings.

Divert savings towards deposits

Budgeting your expenses can help you save money by cutting down on unnecessary spending. However, to maximise the returns on your savings, it is crucial to reinvest this money. One effective strategy involves setting up automatic transfers to your savings account. By diverting the money saved from reduced expenses into monthly deposits, you can significantly increase your total savings over time.

Set savings goals

Setting a savings goal is extremely beneficial for achieving financial success. You can establish a savings target using personal finance apps and utilise the auto-deduct feature to reach your goal through monthly transactions.

Scale up your savings

Investments such as Systematic Investment Plans (SIPs) allow you to invest money periodically in mutual funds. Additionally, these investments can be automatically deducted from your account. You can enhance your savings by enabling a step-up feature. A step-up SIP periodically increases the monthly contribution amount, helping you save consistently as your career progresses and your income grows.

Invest your windfalls

People often experience financial windfalls, such as inheritance or proceeds from property sales. Additionally, employees may receive significant bonuses for their hard work. While it may be tempting to spend this money, consider automating your savings by placing it in a high-yield savings account, which will allow you time to evaluate your options.

Increasing your savings requires financial discipline and self-control; however, savings automation streamlines the process.