The Best Financial Invention of the Century
Saving money didn’t come naturally in my family. I still tell my husband that he blows through money quicker than I’ve ever seen anyone spend. That’s why I’m so thankful for modern technology.
The only way that I could ever get my husband to have money is by convincing him that we didn’t have it. But we had it. Oh yes… and he had no idea that it was growing and would ultimately be the key to the purchase of our house. How did that happen?
It happened with the help of the best financial invention of the century: the automatic withdrawal.
No, it’s not the new Snapchat filter or the web browser that filters out Kardashian news (although that one is probably a close second). Seriously, it’s the automatic withdrawal.
You might be laughing or saying “well that’s just dumb.” I mean it, though! I fully believe that the best financial invention of the century is the automatic withdrawal. This is the reason that I have 6 bank accounts for my family.
What is automatic withdrawal?
Automatic withdrawal is when you have your bank set up to take money out of your account and move it somewhere else. No need to remember to move money around, automatic withdrawal does it for you.
This is the best way to save money without even trying.
Why does it even matter?
If you’re sick of trying to save money only to forget to save or feel like you have no money to save? I get that. That was seriously my world. I was burned out from constantly trying to save money only to find that it was gone before I knew it.
Tell me if this sounds similar:
It’s Friday and you just got paid (money money money…N*SYNC, anyone?) and you see that cushy bank account with that big fat deposit and you feel like you’re rolling in cash. You start to get loosey-goosey with your spending. A little here and a little there… and suddenly you have your rent check in front of you and an empty bank account. You have no money for savings and now you don’t have enough to cover your basic necessities.
Does this sound familiar? I speak from experience: that is an awful place to be!
Automatic withdrawal saved me $6,000 in a year and a half when we were making $17,000 a year.
By setting up an automatic withdrawal to my savings account, I was able to put away $100 the second that paycheck hit my bank account. Every paycheck, $100 got put into savings without me needing to think about it. There was no “well, we can still go out to dinner this week,” or “those shoes were on sale” moments to try to stop me from putting my money into savings.
There were no excuses not to put money away into the savings account, it just happened. And I didn’t even have to think about it.
What do I need to do?
If you’re like my family and are constantly having trouble saving money, talk with your bank about their automatic withdrawal policies. It shouldn’t cost you anything to do automatic withdrawals into another bank account that you own. If your bank charges you, it might be time to find a new bank.
Set up your automatic withdrawal to take place on the same day that your paycheck gets deposited. When you wake up in the morning to see your account balance, you’ll still see money there, but your savings will already be taken care of.
To maximize your savings:
- Set up your automatic withdrawal to take place on the same day as your paycheck.
- Set up the automatic withdrawal to deposit into a savings account that is separate completely from your checking account.
- Max out the amount that you can save. Go for the highest amount possible. It should be at least 10-20% of your paycheck.
- Then forget that you saved money. This way, you’ll still feel the need to end pay cycle with money left in the bank and won’t spend as much.
The idea is to trick yourself. The less money you see in your account, the less you’ll feel compelled to spend.
This way, you’re not just putting whatever money you have leftover after bills into a savings account. That way is a great way to add more money into savings, but by not purposefully adding money into a savings account, you could be waiting for your savings to grow for a long, long time.
By making building a savings account a priority instead of an afterthought, it forces you to build savings into your budgeting. This has been the only way that I would have ever gotten my husband to save money.
I truly do believe that the best financial invention of the century is the automatic withdrawal. We’re living proof that hiding money from yourself to feel poorer than you really are helps to build up a savings account without you even knowing it.
What do you do to save the most money?