Young and the Invested
Set it and forget it — how to automate your savingsSeptember 14, 2023
For many of us, retirement savings is something that — if we think about it at all — we worry about chiefly right ahead of the registered retirement savings plan deadline in March.
But there’s a school of thought that suggests automating your savings, rather than scraping up a lump sum at the last possible minute, is the way to go. Save with SPP took a look at what others are saying about this important topic.
At the Young and the Invested blog, automated savings is defined as “savings that happen passively — that is, without you having to do something every time you save.”
Through automated saving, the blog continues, “a predetermined sum of money is automatically transferred into a savings account or similar financial vehicle.” This happens on a recurring cycle, the article adds, typically “monthly, or every paycheque.”
So — how to do this? The article suggests that if all of your pay is deposited in your chequing account, you can set up — via online banking or a banking app — a regular transfer of some of that money to your savings account.
An article in Forbes Advisor continues that thinking, and advises that you make sure the savings account you choose offers high interest.
“To maximize your savings, choose one of the best high-interest savings accounts, which offer rates that are 10 times higher than the national average. Consider switching banks if your current account doesn’t pay much interest. Online banks often have the most attractive interest rates,” the article notes.
Another idea in the Forbes piece is the concept of boosting savings when you are cutting expenses. Say what, now?
“If you decide to make some cuts to your monthly spending, it’s important that you actually follow through with putting that extra money in savings. You can do this by increasing automatic transfers to your savings by the amount you plan to cut from your spending,” the article explains.
Now we get it. If you cut back on cable or a streaming app or two, don’t just spend that “saved” money — boost the amount you are transferring each month into savings.
The article also reminds us that when we get a raise, our monthly savings should get a raise too.
The U.S. articles mention the idea of using apps that “round up” spending, directing a portion of what you are buying into savings.
One such app, reports the Money Reverie blog, is called Moka (formerly Mylo).
The Moka app, reports the blog, connects to your savings account, and then does a little rounding up.
“For example, if you buy a cup of coffee for $3.25 with your credit card. The Moka app rounds up your purchase to $4.00 and saves the extra $0.75 in your Moka account. If you order that coffee everyday for one year, that’s $273.75 you have saved up. Your money would be automatically transferred from your chosen funding account to your Moka account,” the article explains.
We’re sure there are many other such “fintech” apps to choose from, but the idea of “rounding up” to save seems to be a good one.
If you’re a member of the Saskatchewan Pension Plan you can automate your savings in one of two ways. You can set up pre-authorized contributions to SPP from your bank account, or you can set up SPP as a “bill” via your online banking app and make automated bill payments to your future you. Automating savings means setting it and forgetting it — you can let SPP invest your savings for your future. Check out SPP today!
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.