This is the Day 5challenge in the #MONEY30, a month-long bootcamp for personal finance novices. You can read more about the challenge here, and follow along with us on Twitter, Instagram, or email us at firstname.lastname@example.org.
TIME BUDGET: 10 MINUTES
Money-saving tips are the bread and butter of personal finance websites, and this one is no exception.
But here’s one that’s easy, distinctly modern, and requires neither kicking caffeine nor wearing seven layers of clothing in cramped quarters: automation.
One useful way to think about automated savings is the acronym OHIO, or “only handle it once.” Bob Pozen, a productivity expert, uses this mantra for things like responding to email, but it works for savings, too. Set up your recurring savings once, and never do it again. The best part of automation is that, if you set it up properly, you won’t even miss the money from your budget—because it’ll be set aside before you even see it in your checking account.
If you’re just starting to save, you probably can’t save much. That’s perfectly okay. As long as you start saving something, you’ll be better off financially than a lot of people your age—and probably than most older people as well: 62% of millennials are saving more than 5% of their income, according to a recent survey, and that’s the highest percentage of savers of any generation.
For this fifth-day challenge, we suggested putting aside $10 because it’s a small enough to be manageable for most people. If you think you need to do more than that to take the exercise seriously, go for it. Likewise, if $10 per week is stretching it for your budget, try a bi-weekly or monthly automatic transfer.
“I always tell young people, even if it is only $10 or $15 or month, it’s not necessarily the amount that matters at first, it’s getting into the habit,” says Bridget Eastgaard, founder of the popular personal finance website Money After Graduation. “If you notice it’s not that painful, you can increase it or double it. It’s much easier to work up to saving $300 or $400 per paycheck, the small amounts are perfect to teach you how to save.”
Most banks allow you to do this fairly seamlessly online or through an app.
Again, this won’t solve all of your money problems—or make you a millionaire anytime soon—but it’s a start.
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