Back in the day when I was first learning how to use a checking and savings account in college, I would call myself “saving” in my savings account with each check. But once I “needed” that money for say, food or a cute outfit, I would instantly transfer it to my checking account. I mean, it was easy to do because the money was sitting right there looking at me. Needless to say I never really saved a dime and consistently spent all the money that I made at my part-time jobs.
After years of doing this, I finally had enough of myself and searched for a solution to this problem. About 12 years ago, I discovered high-yield savings accounts and recurring transfers and I’ve never looked back. This has completely changed how I save money and plan for my future goals. I don’t even have a traditional savings account anymore, yep you read that right. I only have checking accounts that I use for personal spending and for paying bills.
This method has not only been a game changer for me but also for the family and friends who have adopted it. I have been able to help several people reach their savings goals using exactly what I’m about to share with you.
Keep reading to see how you can *actually* reach your savings goal this year especially if you have a guilty habit of transferring money from your savings for any little thing. Tot not judging, you heard my story!
So let’s get into it step by step…
- Set a goal (Example: You have a goal to save $5,000 this year.) You can also choose to save whatever you have left after paying bills. That is okay too! When I first started saving this way in grad school I literally saved $20 per month proudly, okayyyy?!
- Create a budget or review your current budget to assess what you have to work with (Ex: You have $1,500 left after monthly expenses are paid.)
- Determine if your available funds are enough to make the goal (If you want to make the goal in 12 months, you should save $416 per month and you’ll still have a little over $1k to spend.)
- If you do not have enough left in your budget for this $416…Find additional ways to make money to meet your savings goal or cut out things that are unnecessary (unused subscriptions, gym memberships, etc.)
- Automate your savings
- Set up a direct deposit directly to a savings account that’s separate from your main checking account AKA a high-yield savings account (HYSA).
- OR create a recurring transfer within the HYSA to withdraw the money from your main checking account on a day that makes sense regularly. This might be bi-weekly or monthly. I like to withdraw the money on payday so that it’s out of sight, out of mind. (Ex: Set up the system to withdraw $416 each month on the 15th or withdraw $208 bi-weekly.)
- Using a high-yield savings account to manage your savings plan not only reduces the temptation to dip into that savings but HYSA pay interest rates at a much higher rate than your standard savings account. This past year I’ve been earning around 5% in my HYSA. Here are a few banks that offer HYSA: Barclay’s Bank, Ally Bank, Sallie Mae, and AMEX Bank. There are a ton out there so choose what works best for you. Pro tip: Do not pay fees on these and do not choose one that requires a minimum balance. If you choose to, you can join Ally Bank with my referral code* and earn a 0.50% cash bonus on the money that you deposit there.
- Don’t touch that automation. I mean it. Let the money grow. If you are using this money for a specific goal, it may be good for you to open another savings account just for emergencies. That way you won’t be tempted to get this money out before you meet your goal.
- Reach your goal by the end of the year 12/31/2024 and celebrate! You should be proud.
*This post contains an affiliate link, which means I’ll receive a commission if you open an account through my link, at no extra cost to you. I will not be able to see your personal account information…EVER
