Several individuals find it difficult to save monthly due to high living costs, impulse spending, or unforeseen emergencies. Online savings accounts offer an automatic transfer option that helps customers save a specific amount monthly on a fixed date. Read on to know more about automatic transfers and the advantages they hold to manage sound financial health.
Understanding Automatic Transfers In Online Savings Accounts:
You can find the automatic transfer option in a bank’s mobile banking app or on its website. This option helps you as a customer fix a savings amount every month and transfer it to a separate savings account. This way, you can save a portion of your income before having a chance to spend it.
Five Advantages Of Automatic Transfers To Help You Save More Money:
Here are five benefits of choosing the automatic transfer option offered by your bank:
- Automatic transfers help you save time: You might not be able to consistently save month-on-month if you rely on your memory to make monthly payments. You can, therefore, automate these monthly savings to maintain a regularity in monthly savings. Additionally, you can also save time by choosing this option.
- They help you develop a healthy savings habit: Consistency is key for any individual who wishes to grow their savings by saving a small amount monthly in an online savings account. It is easy to be swayed by impulsive expenses; and you can overcome this urge by setting aside your savings amount on your payday. Automatic transfers, therefore, help you develop a healthy savings habit.
- You can grow your savings by gradually increasing your automatic transfers: Just like SIP investments, a “top-up” can do wonders in your savings journey. You can also choose to increase your monthly savings amount by opting for automatic transfers.
- Automatic transfers complement goal-based saving: Goal-based saving is a very efficient way to grow your savings since it helps you remain aligned with your financial goals while saving. The nature of your financial goal can change with time, and you must accordingly increase your monthly savings to align with it. Automatic transfers complement goal-based saving by helping you achieve your savings goal every month. You can use an online financial calculator to calculate your monthly savings amount by specifying an annual savings amount.
- You can leverage the power of compounding to increase your savings over time: Compounding refers to the phenomenon of exponential returns when you earn interest on interest and significantly grow your returns over a long period. You can benefit from the power of compounding by consistently saving a fixed amount monthly. Your returns can increase further if you choose to grow your monthly savings amount by a fixed amount or percentage. Higher monthly savings results, therefore, in higher annual savings.
In conclusion, you can build a healthy savings habit by choosing the automatic transfer option in your bank’s mobile banking app. This feature helps you save time, grow your savings, leverage the power of compounding, and practice goal-based saving.
