2009 Money moves: Put your 401k and savings on autopilot
Filed under: Saving Money, Simplification
By now you've likely automated everything from your cable bill to student loan payments, so why not automate your savings? Setting up an automated savings plan is incredibly simple and automatically paying yourself every month is a great way to avoid living paycheck to paycheck or to save for a major purchase like a house in 2009. Additionally, you can automate part of your 401k management to maximize your retirement savings.If you want to start paying yourself by automating your savings in 2009, the first thing you need to do is get a high-yield online savings account. After you have that set up, it's just a matter of funneling money from each paycheck into it. If your employer pays you via direct deposit, many times you can ask for a percentage of your pay to go your high-yield account. If that's not an option, you can set up a recurring transfer through to your new online bank in a matter of minutes.
The one problem with 'set it and forget it' automated methods is that you don't have to remember anything; including to increase the amount you save. Matt Wakefield from Seattle has some excellent advice relating to this problem in regards to retirement savings, "I chose to have it increase my contribution one percent per year, effective the week that my raise (God willing, this year) takes effect. That way, it doesn't appear as a takeaway from my paycheck, which makes it hurt that much less." Automatically increasing how much you save every year is so smart it's scary!
That's how to make money in 2009 by automating the saving process. Get real with New Year's resolutions and choose something that is easy to do. Eliminate the painful and easily forgotten manual transfer of funds to your savings account in favor of an easy automated solution. While you're at it make sure all of your auto pay accounts are up to date, so you don't end up losing money to late fees in 2009.
Money Clips
- HILARIOUS: Warren Buffet Plays Axl Rose in New Commercial - Huffington Post
- ON THE PLUS SIDE: Where Home Prices Are Rising - CNNMoney
- FRICTION: Could China Trade War Put Walmart Out of Business? - 24/7 Wall St.
- PROFILE: Opinionated Auto Industry Insider Dies - FORTUNE
- DON'T LAUGH: More Homeowners Turning to Fake Grass - SmartMoney
- HIT HARDEST: States Hurt Most From Rising Gas Prices - CNBC
- GET YOUR MONEY'S WORTH: Best Cars to Buy Used - CBS MoneyWatch


Reader Comments (Page 1 of 1)
1-15-2009 @ 10:01AM
Elizabeth said...
One other problem with this approach might be if the bank drops the rate considerably. I found a 4.5% savings rate at money-rates.com but then the bank dropped it to 2.5% so I had to go back and find another bank at 4.0%. It takes a little checking but the extra interest adds up
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3-01-2009 @ 8:31PM
Jorge said...
Anything you can do to automate savings is a great idea. I take a similar approach and have all of my savings completely automated, I don't even have to think about it.
The reason this is so important, is that each percentage point of savings makes such a big difference in when you will reach Financial Independence. I ran a few scenarios on what your percentage savings rate is vs. how long until you reach Financial Independence. Very sobering. Check out the graph at:
http://independentminded.org/2009/02/28/are-you-saving-enough-to-achieve-your-financial-goals/
Bottom line is that you better be saving North of 15% of your Gross Income every year if you even want a chance at achieving Financial Independence at a reasonable age.
Happy savings and good luck!
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