Due to rising inflation, any working professional in a Tier-I and II city in India finds it difficult to save in 2024. This does not mean that you have to restrict your lifestyle and cut down on experiences that make you happy since there are more effective and sustainable ways to grow your savings. Automatic savings plans can help you automate your monthly savings, thereby helping you consistently grow your savings using your savings account.
What are automatic savings plans, and how do they work?
An automatic savings plan automates your monthly savings, thereby helping you save monthly without compromising on your lifestyle. Thanks to automatic savings plans with savings accounts, you can transfer a specific amount to your designated savings account as soon as your salary is credited. You can also choose to transfer this amount to an FD (fixed deposit) instead. Automatic savings plans helps you streamline your cash management and also helps you pay bills on time.
Most banks offer automatic savings plans through their mobile banking apps. To sign up for this feature, you must download the bank’s mobile app, sign in, and choose the amount that you wish to save and the frequency at which you wish to save it. An automatic savings plan can help you build an emergency fund and spend money without worrying about not saving enough.
Three major ways to automate your savings in 2024:
Automating one’s savings – besides being one of the neatest hacks to save consistently in 2024 – has several modes. You can automate your savings in three major ways –
- Set up automatic transfers using your mobile banking app: As mentioned earlier, your mobile banking app is the medium through which you can sign up for an automatic savings plan. Banks offer the ‘automatic transfer’ option that helps you automatically transfer your savings to an alternate savings account (preferably with a higher rate of interest).
- Automate your regular, monthly expenses: While it is extremely important to save, it is also crucial for you to streamline your regular expenses. Banks refer to this service using different terms such as ‘auto-debit’, ‘auto payment’, etc. Put simply, this service automates your regular monthly payments such as utility bill payments and credit card EMIs (equated monthly instalments).
- Choose the right investment vehicle to grow your savings: A very efficient way to consistently grow your savings is by choosing the right investment option. You must ask yourself the question, “in which investment instrument should I automatically transfer my savings to grow them at a consistent rate?”. You can choose from a variety of options – FDs, RDs (recurring deposits), or mutual funds via SIP (systematic investment plans). You must analyse the interest rates charged by FDs and RDs and the past performance of mutual funds to take the right decision.
In conclusion, automatic savings plans help you spend money without worrying about saving by transferring a fixed sum to a savings account/FD/other investment instrument at the beginning of the month. You must check the interest offered through the savings account and if it has a minimum balance requirement before signing up for an automatic savings plan.
