Complete honesty moment: saving money is second nature to me.
Even as a teenager, when you’re supposed to be a little reckless with your cash, I was hoarding the dollars I made in that amusement park ice cream stand like I’d never make another. In college, when my friends were complaining of bank accounts with less than $20 in them, I never went below $1,000. And in the past 3 years, I have managed to save $60,000 as a single lady all on her own, and that even excludes anything I contributed to retirement. Like I said, I’m a natural.
However, this isn’t the case for most millennials. In this 2016 GoBankingRates study, they found that 72% of young millennials (18-24) have less than $1,000 saved, and 31% have no savings at all. It doesn’t get much better for the older millennials (25-34) either: 67% have less than $1,000 and 34% have nothing saved.
This isn’t surprising, though. I was fortunate enough to graduate college with no debt and a well-paying job, but that is a rarity for most millennials. Student loan debt is crippling our generation, where we’ve seen an almost 400% increase since 2004 in the national balance. In addition, most of us millennials graduated from college in the midst of a recession, when jobs were scarce and good-paying jobs even scarcer. It’s no wonder that there is little room for savings when you have high debt and a low-paying job working against you.
But, guys, we can’t use that as a crutch any longer. Yes, we graduated in less than ideal circumstances, but most of us have had time to rebound and figure it out. If we want to hit our goals, we have to make saving a priority, and the best way to do that is to make it as easy as possible. The best solution? Automation.
While budgeting is the best way to control your money, automating your savings is the best way to get to your goals. It not only makes the process effortless, but it also acts as a built-in watchdog that ensures you aren’t spending money you should be saving. Goodbye, pizza-shaped pool floatie. Hello, fully-paid off car.
If you’re serious about hitting your financial goals, you have to implement this into your financial strategy. Not should. MUST. And I know actually committing to saying adios to a good chunk of your money each month is a bit uncomfortable, but honestly, you should be excited: this is how you’re going to have that home/new car/trip to Bali faster than you had originally planned. And even if it seems overwhelming, don’t worry: you know I’m going to take you through the process step-by-step to make it easy and pain-free.
So grab a drink, put on your ladyboss pants, and let’s get started.
HOW MUCH SHOULD I SAVE?
Great question. And it all depends on what your goals are and when you want to hit them.
Two of my first goals out of school were to build an emergency fund and buy a home, so I came up with my own personal goal tracker to help me achieve them. This tracker not only calculates the monthly savings you will need to hit your goal based a) on your timetable and b) how much you currently have saved, but it also gives you great visibility as to where you are in your progress.
This tool alone has helped me buy my home, fund two remodeling projects, and have savings in the bank to cover my next 3 (yes, 3!) financial goals. That’s correct, ladies & gents. My personal goal tracker works so well that I’m currently working on number 4. And it can help you, too – download it here for free!
Once you’ve calculated your monthly savings, give yourself a trial run to ensure you can still survive without it. For 3 months, withdraw that money out of your bank account as soon as you’re paid, and put it away for safe keeping. DO NOT TOUCH IT UNLESS THERE IS AN EMERGENCY. (And no, a Michael Kors bag on clearance is not an emergency.)
If you can manage those 3 months without it, then it’s time to start automating it every month. On to Step 2…
WHERE DO I SET UP AN ACCOUNT?
I am not (repeat NOT) an advocate for setting up a savings account with the same institution you bank with. Why? It makes it too easy to transfer money between the accounts. A click of the button and all that money you’ve been putting towards two weeks in Switzerland has been spent on a new summer wardrobe. Not. Having. It.
Moving money is still fairly easy with a separate bank, but it more so provides a mental barrier for you. The money at one institution is strictly for savings, and the funds in another are for spending. Physically Separated = Mentally Separated = More Goals Hit. In the words of my spirit animal Amy Poehler: Yes, Please.
Therefore, I would suggest setting up a savings account with an online bank. They typically offer higher interest rates, so while you won’t ever make a ton, you will make more than the standard banks would give you.
My personal favorite, the one I use, and the one I am going to show you how to set-up an account with below is American Express Savings. They offer a 0.90% interest rate with no minimum deposit, which is the second highest currently on the market.
The first? Ally Bank, which offers a 1.00% interest rate. I personally don’t save with them because they also have checking account options, which again, gives it the potential to make it easier to withdraw funds; however, if you’re disciplined enough, you can check them out here.
Now, for those of you bad b!#&#@ out there ready to take the plunge and absolutely slay your goals, I’m going to walk you through how to set up an online account. Take another sip of that drink and let’s proceed.
HOW DO I SET UP AN ACCOUNT AND CREATE AN AUTOMATIC TRANSFER?
Step 1: Go to American Express Savings and select “Apply for a Savings Account”. You will need the following information to complete the application:
- Social Security Number
- Date of Birth
- Phone Number
- Home Address
- Email Address
- Bank Account and Routing Numbers
Follow the prompts (they’re pretty self-explanatory) until you officially have a savings account in place. You will receive a confirmation email once it has been set up.
Step 2: You should already have linked your checking account during the set-up process, but if not, you can set one up now (or anytime for that matter.)
To do so, log in to your account, select Transfers at the top of the screen and then “Linked Bank Accounts.” Click on the blue “Link a New Account” button on the middle of the screen.
Step 3: Enter the bank information (account + routing number) for the account from which you would like to transfer money and hit “Submit.” American Express will have to verify the account, so you can select either to do it through test deposits (I went with that because it’s faster) or a mailed authorization form & check. Just follow the instructions on the page. They explain it way better than I ever could.
Step 4: Once your account has been verified, return to your home page on the American Express Savings site and select “Transfers – Create a New Transfer.”
Step 5: Enter in the transfer amount, your “From” Account (i.e. your checking account), your “To Account” (i.e. your American Express Savings account), the date you’d like the transfer to take place, and the frequency.
Note: for these last two options, I would suggest you set the transfer date a day or two after you normally get your paycheck deposited and set your transfers to occur monthly. This ensures that you are essentially paying yourself first and won’t be using that money for day-to-day expenses throughout the month. Because let’s be real: if it’s in the bank, we’ll probably want to spend it.
Step 6: All done! Just wait for the money to be transferred, and you are all set to start loading up that emergency fund or saving for a new car.
Don’t let this step of your financial future be one that you read about and never do. Like I said before, it has be the most instrumental tool I’ve used to amass over $60,000 in savings over 3 years, and I want it to help you hit your goals, too. So stop whatever you’re doing and take 15 minutes to drastically improve your life and your future. There’s nothing stopping you (except you).
Join the conversation: What goals has automating your savings helped you hit? What savings tricks have you used to get to your goals faster?
Don’t forget: Download my FREE personal goal tracker here to help you calculate your monthly savings!
 Whichever bank you choose, make sure that they are FDIC-insured. This qualification basically means that if the bank were to go under, the government would insure (or refund) you up to $250,000.
 You can find your account and routing numbers on your checks or through your online banking account. If you can’t find the routing number, simply Google the name of your bank + “routing number.”