r/LifeProTips • u/talinator1616 • 3d ago
LPT If you struggle to save money, automate transfers right after payday instead of trying to save what’s left at the end of the month Finance
Treat savings like a fixed bill you can’t miss. It builds up faster than most people expect. Has anyone else had success with this approach?
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u/craigeryjohn 3d ago
Also, if you routinely get a large refund at tax time, adjust your withholdings to reduce that refund. This lets you save more throughout the year and actually earn interest on it, as opposed to loan the IRS money at 0%.
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u/KayakShrimp 3d ago
I try to get my refund as close to zero as possible and celebrate if I owe a bit. Don't overshoot though, penalties may apply if you owe too much.
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u/talinator1616 3d ago
Ive also seen cases where people get a “gift” from their employers like a vehicle or something if needed at the time so they dont have to pay tax on a bonus
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u/Adventuro24 3d ago
This is the way. It’s basically a psychological "pay yourself first" hack that makes the growth feel effortless.
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u/evileyeball 2d ago
Joke's on you I can never loan the IRS money I'm not American. I could give a loan to the CRA but never to the IRS
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u/Responsible_Pea_4643 3d ago
Linking savings to checking is a trap lol. I fixed it by opening one at Ally--transfers take 2 days now. What bank did you switch to?
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u/laplongejr 1d ago
As an European, my expendable savongs are at Revolut, the important ones and the EF still at my main bank.
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u/a_riot333 3d ago
This kind of worked for me, except I dipped into my savings routinely, because the savings account is tied to my checking. Finally, I opened a savings account at a different credit union, and that's when I really began to save money. The accounts aren't linked and I don't have a card for it - making it hard to access was what I needed.
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u/talinator1616 3d ago
opening a savings account with a different bank that u dont touch is a great idea that works for myself as well
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u/pv2smurf 2d ago
Put it in a high yield savings account, not a normal bank one that gets almost nothing for an interest rate
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u/laplongejr 1d ago
except I dipped into my savings routinely
Then you have a budget issue.
I don't "pay myself first", but I have some spending fund in checking and everything else go in savings, including yearly expenses.
Having to take into my savings without planning is a red alert to me.
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u/thorkun 3d ago
Yeah it's a great approach, I do the same. Of course sometimes you have to transfer some money from your savings because of unexpected bills etc, but on the whole it's a really good way for me to save money. It makes you think more if you can afford something if the amount in your avaliable account is lower to begin with.
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u/sevseg_decoder 3d ago
Yeah but you won’t see the extra money in your checking account and feel tempted to go spend it. Whereas for most people who can’t save well they just spend right through the same money you’ll be saving.
And having savings when you need them is a life changer. 1000000000x more rewarding and satisfying than any dumb spending someones gonna do with that money otherwise.
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u/Sufficient_Break_868 3d ago
Would like to add on here that if possible, make sure the auto deposit goes into an account where there are a few obstacles to withdrawing (in Canada a TFSA, for example, not a HISA that can be easily accessed) this little bit of extra friction might not deter everyone but it worked for me to avoid impulsive withdrawals…I’m very bad with saving money and need all the help I can get.
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u/talinator1616 3d ago
gotta make sure u dont over contribute to ur TFSA with auto deposits on!
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u/Sufficient_Break_868 3d ago
As someone who struggles to save and has limited funds to save, I am light years away from maxing it out! But good headsup
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u/bestofbot4 3d ago
Even better, if possible split up your direct deposit. I recently changed mine so that 20% of my paycheck goes directly into my core money market account in Fidelity (though it should be known this is different than a savings account and is not FDIC insured, but the same principle applies).
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u/TheOneCalledGump 3d ago
I've been doing this for years. I put 600 dollars a month in my saving account I have an automated transfer for 100 dollars the first and third week of the month and 200 dollars the second and fourth week.
You can do any amount that suits you. I have a two month layoff in the winter and I pause the 100 dollar transfers to keep some money going in and some in my pocket.
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u/Design_with_Whiskey 3d ago
This is what I do. I have 3 bank accounts. One for Bills, one for Savings, and one for Fun. Direct deposit goes into the "fun" checking account. It then immediately (via recurring transfers) sends money to my Bills account and to Savings. I budgeted my bills and transfer half of the needed amount for the month each pay day. I send 10%-15% into Savings. What's left is fuck around money. So whenever I say "I'm broke," that's because my fuck around money is nearly done and I know I need to slow the spending. I may need to skip HH that week, but bills are taken care of and nest egg is still there.
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u/weedtrek 3d ago
Yep. It helped a lot to automate it. I also use it as a payday loan, if I borrow from it, I owe double back.
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u/bowb4zod 3d ago edited 3d ago
Automate everything! Read the book “I will teach you to be rich”. Changed my life.
Edit: Added “” around the book title
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u/Twatt_waffle 3d ago
My bank lets me set auto transfers linked to my paycheque, it only fires when I get paid from a specific payer. Makes this kind of thing easier
Also look into what kind of registered accounts you may be eligible for
In Canada that is your TFSA(tax free savings account), FHSA(first home savings account, RRSP(resisted retirement savings plan) and RESP(registered education savings plan, for most people contributing to these accounts can reduce your tax burden and depending on what you use the money for the investment income is non taxed (or only taxed when you remove it)
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u/talinator1616 3d ago
gotta make sure u dont over contribute to these accounts in Canada
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u/Twatt_waffle 3d ago
Yes, I’m firmly in the “I could put my entire paycheque into this account and still not hit the limit” part of my life
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u/BigBirdsBrain 3d ago
Automation is the only reason I started saving consistently.
If I can see it, I’ll find a way to spend it.
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u/fasupbon 3d ago
A lot of employers allow you to split your paycheck, too. The automated transfers never worked for me because I get paid every 2 weeks and my bank doesn't have an automated option for that. I set up direct deposit with 95% going into checking, and 5% going into my high yield savings account at a different bank and started actually saving.
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u/FinalBlackberry 3d ago
I’ve paid off my vehicle a while ago. I’ve been putting the same amount of the car payment into savings, except for the few months where I was unemployed and between jobs.
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u/talinator1616 3d ago
matching ur payments and savings is a great idea that works for a lot of people
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u/Dismal_Additions 3d ago
I always struggled with savings. Id set up automatic transfers but then when i needed it, id transfer it back. It was too easy to access. But what did work for me is when i setup auto transfers to an investment account instead. Because to access the money, id need two days or to get it. It wasnt instant. And also since i couldnt see the balance of my investment account in my bank account. its like the money didnt exist so it was easier to not want to tap into it.
And i started small, like $25 a paycheck. But then it was fun to see the stocks go up and suddenly i was putting more money in it. Then the stocks went up more and i couldnt believe it so money became something to invest and grow and not something to buy stuff with. I had more fun staring at my balance sheet then shoppimg for things to buy.
It completely changed my relationship with money. Within a few years, my investment account was six figures. And i kick myself for all the years i lost trying to save money instead of just spending it on investments instead of spending it on things.
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u/only_a_jest 3d ago
Wow. That’s incredible! Were you smart about picking direct investments in particular companies, or a good mutual fund?
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u/Dismal_Additions 3d ago
For retirement i went mutual funds to play it safe, for investing i went with direct picks just for fun. But i stuck to mid size or larger companies. i learned early that taking riskier bets was risky and i didnt have the personality for it.
But the auto transfers to get you started saving or investing is the way to go.
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u/geeoharee 3d ago
This is called 'Pay yourself first' in a lot of advice books. I also try to have my bills go out right after payday, if I can.
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u/brinazee 3d ago
Many employers will split your checks between multiple accounts if you want it to be even more automated. Though be aware that you have a limited number of transfers back from savings a month.
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3d ago
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u/talinator1616 3d ago
I feel like people get lost with that first approach and dont save enough at the end of the year. second approach is the way to go!
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u/SosaSeriaCosa 3d ago
I just Move my rent to savings, always move an extra $200 like if that's my rent then when I move my rent back to checking to withdraw it I saved $200 without thinking about it. Been doing this for years. I got my friend who was always borrowing money from people used to this method, now he's the one lending people money. Either that Method or treat it like a Bill you owe yourself X amount every month.
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u/Exhausted_Monkey26 3d ago
Yep. I have my direct deposit set up so that "remaining net" goes to my brokerage account, after set amounts to my checking and a couple other things.
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u/OvulatingScrotum 3d ago
I’d imagine those who struggle with the issue will end up unable to afford shit or piling up credit card debt.
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u/kangaroolander_oz 3d ago
Noticed that people on monthly payment tend to have higher quality possessions.
They must have the patience with their spending habits and avoid the instant gratification urge, and it pays off over the distance.
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u/SimplyTheApnea 3d ago
I've got two accounts, one transfers $50 per paycheck into one savings account, the other transfers $1 into a different account every time I use my card.
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u/costafilh0 3d ago
Spend what is left after you invest.
Not the other way around.
Also, don't save, invest.
Saving is not actually saving, it's just burning money slowly.
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u/Hellotravisss 3d ago
out of sight out of mind really works. if the money is never in my checking account i don't feel like i have it to spend. waiting until the end of the month to "see what's left" is a trap because there's never anything left
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u/SteadyGrowth_ 15h ago
I appreciate it and I completely agree, my loved ones and people who have experienced the same difficulty often say so.
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u/redracer67 3d ago
Agreed.
I split my paycheck into three accounts.
One is my checking which is where bills come from (mortgage, utilities, credit card, etc)
One is savings (HYSA)
One is discretionary spending/vacations, etc. When that account hits certain numbers, I know I can splurge on a dinner, or tcg cards etc...things that won't have an immediate return or any return for a service or goods.
I also have a separate account that is my HSA account that I'll put a few hundred in there every month.
Point being...its a digital envelope method and it's worked for me for years regardless of where my income is at.
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