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October 21, 2020 | By: Editorial Staff

“Pay Yourself First” Using Financial Tools for Automated Savings

Money Management | Budgeting | Budget Planner

Let’s hear it for automated savings, those simple, innovative financial tools that offer real peace of mind as time rolls on! Today’s online banking systems and money-saving apps have evolved to the point where they can make a better personal money manager out of just about anyone. We’re talking systems and technology that not only make saving your money hassle-free, but also put you on cruise in terms of smart monthly spending and budgeting. It all comes down to that time-honoured tradition that we call “pay yourself first.” 

Divert Earnings to Savings Automatically

Financial writer David Bach popularized the concept of “paying yourself first” in his book, The Automatic Millionaire. It means moving an earmarked portion of your earnings into your savings whenever a pay cheque is deposited in your bank. 

Once you set up automated savings through your bank’s savings app, a portion of your money is automatically moved into savings with every deposit; you don’t have to lift a finger or even crunch a number! Pay cheque to pay cheque, banking apps continue to divert earnings to savings, over time gathering a healthy nest egg. 

Automated savings also help curb any temptations you might have to immediately start spending that entire fresh pay cheque. As they say, “money out of sight is money out of mind,” so you can be assured that when left alone, your money will happily grow all on its own. Be sure to speak with your bank about your options. 

Whatever Your Savings Goals, Automation Helps!

Automated banking is receiving more attention these days due to COVID-19. With many Canadians working from home or offsite, direct pay cheque deposits to banks are trending towards a new normal. So, there’s no better time to explore the many money-saving options offered by banks and financial apps.

Maybe you’re already into the swing of things through automated mortgage or rent payments, bill payments, credit card payments. Perhaps you’ve even consolidated different bank accounts to further simplify matters by managing all your money from one base. 

But what about paying yourself first? By doing this, you can begin saving for your short-term, medium-term, and long-term financial goals. For the short-term, maybe you want to create a holiday fund, upgrade your cell phone, or purchase much-needed new business equipment. For the medium term, perhaps you want to save towards a new car or create an ample emergency fund (a vital buffer for unforeseen financial challenges). And for the long term, you might want to be putting aside money for a child’s education or your own retirement nest egg. Whatever your savings goals, automation can lend a hand.

Use Online Tools to Rise Above Bad Spending

Before setting up your automated savings, there is a little bit of work you need to do. Namely, you need to consider your savings goals in relation to life needs and wants, with needs always being your first order of business. This will help you determine how much you should save each month based on your monthly income and expenses. 

To get to that point, it’s important to track your monthly spending to keep your goals realistically in line with what you expect to save. When tracking your spending, you might find some bad spending behaviours that you can curb. For example, maybe you’ve been putting money towards a lot of small non-essentials that add up to significant sums over time. Or you might wake up to the fact that you’ve been thoughtlessly indulging in financial guilty pleasures and luxuries that you could do without. Online tools can help you rise above these counterproductive habits, with very positive budgeting results. 

Set Up with our Budget Planner + Expense Tracker

Wondering how much should you pay yourself first? Credit Canada’s free online Budget Planner + Expense Tracker gives you a complete breakdown of how you spend your money on a monthly basis. All you need to do is plug in some basic information and start tracking your expenses. This free financial tool does the rest of the work for you, letting you know when you’re over or under budget, and how your outlays compare to general spending guidelines. Armed with this information, you can easily make adjustments to your spending in order to implement automated savings. 

Again, talk to your bank about how you can take advantage of their automated savings tools for multiple purposes, such as putting money towards investment products. Depending on your savings goals, you might explore the specific benefits of a number of products, including:

Explore Innovative New Apps for More Savings

Beyond automated savings achieved through your bank, a variety of new apps and savings tools have come onto the market in recent years, offering innovative ways to help you save money in league with your bank. Some of these tools, known as ‘round-up’ apps, let you automatically save spare change by rounding up amounts from your everyday purchases. 

For example, if you spend $5.25 at a coffee shop, the app will deduct $6  and automatically transfer 75 cents into a designated savings account. “Many of these apps offer a variety of financial solutions and account types to help people with short-term and long-term savings goals,” according to Forbes. In Canada, round-up apps such as Wealthsimple, Mylo, and others are growing in popularity, so consider checking them out.

Credit Canada is Here to Help

If you’re wondering how to save money, automated savings, round-ups, and other financial apps are great tools to use that require hardly any effort on your part. Of course, if you still find yourself struggling financially, Credit Canada can help. Our certified Credit Counsellors can offer money-saving tips and more, and the call is free. Contact us today to learn more.



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