Automatic savings: the method that works without willpower

If saving depended on willpower, we would all be millionaires. Personal finance experts’ solution is simpler: pay yourself first with an automatic transfer. You schedule it on payday and saving happens on its own, before you can spend it.

How to set it up

• Choose 10% of your income as the initial goal (you can raise it later).
• Schedule the transfer on the same day as payday, to a savings account or certificate separate from your spending account.
• Do not touch that account: having no associated debit card helps resist temptation.

Why it works

Automatic saving eliminates the daily decision. You do not compete against your impulses: the money is already gone before the impulse arrives. It is the same principle pension plans and forced savings systems use with such success.

The key figure

10% of your income. What a monthly automatic transfer can accumulate into a solid emergency fund in two years.