If you start saving 2 percent of your income but your situation changes, have you increased your savings rate? Can you get to 10 percent two years after starting your system? If you have been saving 10 percent and don’t feel any stress, is it safe to move to a 20 percent rate of savings? Once your system is a natural piece of your process, so much so that it is invisible to you, you could be giving up some control or awareness of your financial situation.
Personal finance is about making conscious choices with your money. That includes not using money without considering the circumstances. The present scenario changes over time, and a system does not relieve you of the need to see every pay check as a money-saving opportunity.
Automatic saving leads to success. A study from 2009 (Gordon, Romich, & Waithaka) determined that customers who created systems in the form of automatic savings transfers had more success accumulating savings. The accumulation savings is an intermediate goal, meaning it’s part of a path towards something else. With more savings, you can avoid expensive debt, and you can reach financial independence sooner. This gives you the ability to have more control over your life, to spend your time doing what makes you happy without having to be concerned about negative financial consequences for every decision you make.
Systems like automatic savings will help get you there.
How do you automate your savings?
Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991.
- 5 reasons why Utah is a great place to live
- Top 50 companies to work for in Utah
- Why babies are expensive, but could save you...
- Utah has some of the rudest drivers,...
- More home-cooked meals really can save you...
- Yellen says US families need to boost savings
- Phone lines are open: Customers camp out for...
- Financial interventions don't work
- Utah has some of the rudest drivers,... 38
- US wealth gap putting the squeeze on... 27
- 5 reasons why Utah is a great place to... 17
- Yellen says US families need to boost... 9
- Financial interventions don't work 7
- Extended warranties a big sell. Are... 4
- Dave Ramsey says: Tips for stretching... 4
- Child poverty just dropped for the... 4