Setting Up Direct Debits to Automate Your Monthly Savings

There’s a reason financial advisors have preached the “pay yourself first” principle for decades. It works. When you treat your savings like a non-negotiable bill – something that gets paid before you have a chance to spend the money – you save more consistently and with far less effort than manual saving ever allows.

How Does It Work?

The mechanics of this are simple: set up a direct debit or automatic transfer that moves money from your everyday account into your savings account on payday. You never see it sitting in your spending account, so you never miss it. Over time, this one habit builds wealth quietly in the background of your life.

ING Australia makes saving money with their savings accounts and the automated transfer feature, in their banking app. You can decide how much money you want to save. You can choose when you want to save it, like every week every two weeks or every month. Furthermore, you can even set it up so that the money is transferred after you get paid. You only have to set it up one time. Then you do not have to think about it again. The money will be saved whether you are thinking about your money or not.

Automation is King

The psychological benefit of automation is just as important as the practical one. When saving is a manual process – something you do with whatever’s left at the end of the month – it becomes the first thing cut when life gets expensive. The electricity bill arrives, you decide to skip savings this month, and then somehow you’re still saying the same thing six months later. Automation bypasses this entirely.

Start with an amount that feels slightly uncomfortable but manageable. If $200 a fortnight feels tight, start with $100 and increase it by $25 every three months. You’ll adjust to each new level faster than you expect, and the gradual escalation builds your savings muscle without requiring dramatic lifestyle changes.

See also: How Cloud Computing Is Revolutionizing Business Operations

Set Savings Goals

Setting up automated transfers for different savings goals is also a good idea. Many banks let you create savings accounts or sub-accounts within one profile. You can have pools for an emergency fund, a holiday, a house deposit or whatever savings goals you are working toward.

Savings goals like a holiday or a house deposit can have their separate pools. This way the money for each savings goal is separate. You can see how you are doing with each savings goal. Seeing the money for each savings goal grow is more motivating than watching one general savings balance grow slowly. Savings goals are what you are working toward so it is good to be able to see the progress of each savings goal.

Optimise and Adjust

Review your automated transfers every six months. If you get a pay rise, increase your savings transfer proportionally. The lifestyle inflation trap – where pay rises quickly translate into higher spending with no increase in saving – is one of the most common reasons financially capable people don’t accumulate wealth. Catching it early by immediately redirecting a portion of any new income to savings is one of the simplest and most effective financial habits you can adopt.

Automation isn’t a magic solution, but it removes the biggest obstacle most people face with saving: themselves!