30 Second Saver - Automatic Micro Transfers
Easy life tips to save you money.
The average vacation in the U.S. costs around $1,200 per person. What if you could pay for that without even trying.
If you've already saved it, you can't spend it
We live in a technological age. The financial industry is no exception. Lot’s of people do banking online now. So why don’t you have a digital piggy bank? Most people look at one account when making impulse financial decisions; their checking account. Can I go meet the guys for that beer? Can we go see that movie this weekend? Let me check the ol’ checking account and see how we’re looking.
This week’s 30 second saver is the automatic micro transfer.
This is one of our favorite tips for saving. You can do it right now as you’re reading this article.
Exactly what it sounds like. We all notice our checking account trickle down between pay days. 10 bucks here, cup of coffee there, gym auto draft. Many of us pay our bills with an automatic draft. We can save that way too.
This is not intended to be a large savings transfer after a big pay day or just your regular transfer to savings when you receive your paycheck. Those are both great, but not what we are talking about here.
Choose a small amount, we recommend $5-20 dollars. You want an amount large enough it will build some steam, but not so large you need to worry about it interfering with your regular budget plan. You’re “curving” your behavior.
Set up your bank to automatically transfer the same amount from your checking into a savings account every day. Most banks only transfer on business days, so figure you’ll average 5 days a week. Set this as an indefinite transfer occurring every day.
That’s it. you’re done. Now forget about it.
The Secret is Consistency
Sounds a little too simple? It isn’t supposed to be complicated. We all have emotional feelings about money. Generally, when we have more of it, we tend to feel happier. When we feel happier, we tend to be looser with spending. By moving money in small, regular amounts to savings. It feels like just another transaction. “Oh, I see, I have 50 dollars less in my account than I did on Tuesday. Better bring my lunch today.”
Think of it like this. Could you do 50 push-ups right now in one set? Probably not. Could you do 1 push-up 50 times? I’m guessing you are much more likely to have said yes to the second option. Do you know what you’ve done when you do 1 push up 50 times? 50 push-ups.
When we make those quick micro second spending decisions, we’ll naturally feel a little less wealthy, and reduce our impulse purchases. We’ve all heard the line but have you actually counted it up? How much did you spend on coffee last month? Instead of telling yourself you will cut out curve whatever item. Tell yourself you have less money to spend to begin with.
How Much Difference Could this Possibly Make?
We’ll close with an easy example.
$10 dollars per day into savings.
5 days a week
$10 X 5 = $50 dollars per week.
4 weeks per month
$50 X 4 = $200 dollars per month
$200 X 12 = $2,400 dollars per year.
Spoiler alert. There’s 52 weeks per year. 4X12 = 48. So its really $2,600 dollars per year!
$1,200 dollars per person? Looks like it’s Barbados for two next year. We even have a little pocket money.