Increase Your Saving and Investment Potential With Automatic Deposits

posted by Andrea | 12/13/2017
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I’ve said it before and I’ll continue to say it over and over again — automating our savings and investments has been one of the main reasons we’ve been able to stick with our lofty savings and investment goals for the past 11+ years.

When we first set up our bank accounts after our wedding, we had Dave’s entire paycheck AUTOMATICALLY deposited into our checking account, and my entire paycheck (back when I was working outside the home) automatically deposited into our savings account.

We also set up Roth IRA’s for each of us, with a specific amount AUTOMATICALLY transferred from our checking account to our investment accounts each month.

NOTE: I’m often asked who we use for our investments…

We use Edward Jones for no other reason than it is/was very convenient! We are happy with our investment guy so we currently have no reason to switch, but we definitely aren’t opposed to other options in the future. 

It only took us a few minutes to set up these systems so many years ago… and since then, the automation has saved us boatloads of time, piles of monthly checks, hundreds of trips to the bank, and the peace of mind knowing that we are continually building up our savings and our investments.

Dave and I decided very early on that we wanted to live off half our income — which basically amounted to ONLY using Dave’s income for all our bills, weekly and monthly expenses, vacations, gifts, etc. etc.

We even pulled our investments from his income since we didn’t want to take anything away from our savings until we had a larger planned purchase — like a new-to-us vehicle, a home renovation, hospital bills for our children’s births, or a large principal payment on our mortgage.

There have been many months when the money in our checking account was getting low and we thought we might have to dip into our savings for a non-major expense. However, each time, we were able to cut back in other areas and leave our savings and investments untouched.

If we did not already have those automated systems in place and all our income simply went into our checking account, I’m 100% positive we would have spent significantly more on our daily expenses because the money would have been so readily available.

The fact that our money was automatically going to savings and investments meant that it would have been extra work for us to get to that money. We would have needed to make phone calls, drive to the bank, and even sign paperwork in some situations (this was before we did online baking!)

Instead, we saved ourselves the hassle and got creative with other ways to save without sacrificing our savings or investments.

Now, almost 12 years later, we have been able to use the money in our savings account to pay cash for all our home renovations, pay cash for 4 new-to-us cars (not all at the same time!), and pay off our current home’s mortgage in less than 7 years.

And if you think you need a huge income to be able to pad your savings account or start investing, I can assure you we do NOT, and you don’t either!

Dave works for a Christian school and I work during my kids’ naps! We are middle class people living in a relatively low-cost-of-living area, making a point to live below our means, and automating our savings and investments.

I remember when we set up our (very) small investment account soon after our wedding. We invested $100 every month and our investment guy told us to leave the money untouched for at least 7 years if possible. Since everything was automated, we essentially forgot about that money until we decided to use some to buy our minivan 2 years ago.

I was shocked to see how quickly $100 a month (plus investment growth) added up over the years. It almost felt like “free money”!

If $100 seems impossible with your budget, I’m positive that even $10 or $20 a month WILL add up over the years. And if the process is automated, you won’t even need to think about it or worry about forgetting!

auto deposit

As we approach another New Year with new goals, I’d encourage you to set up a monthly auto-deposit into a specific savings or investment account. Then commit to leaving that money untouched for as long as you possibly can.

You might just be surprised how quickly it adds up!

What are your thoughts on automating your savings and investing?

photo source top photo credit

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24 comments

  1. Marilia de M B Farias

    12/14/2017

    Obviously you don’t know me, but I feel like I know a little of you. I follow your blog for some time now. If my memory isn’t wrong, since James was born. I really don’t remember how I met your blog, but I truly believe it was by God’s hand. We are in a time of the year where we become sentimental and grateful for all blessings. And I had to write and let you know that you have been a blessing in my life in so many ways, a real angel. And you not even knew it. I’m very far from you, from a different country, english is not my language, so excuse me if my writing isn’t so good. Thank you for your tips on so many things, you have an open mind, you don’t mind to share, you help so many people I’m sure you don’t even imagine. My life has become so much simpler, so much organized, and this has made me so much calmer and happy. I guess I could be your mother, I’m 56, but I have learned so much from your words and examples. I had to come here and say thank you. You have a beautiful family, lovely kids who will grow with great examples. I feel like you all are my family. God bless you all and give you a Merry Christmas and a great New Year.

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    Andrea Reply:

    Wow!! Thank you so much Marilia! You just made my day 🙂
    I really appreciate your kind words of encouragement! Merry Christmas to you too!

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  2. Summer

    12/13/2017

    I LOVE the painting (?) of the house! Who did it?!

    As always, you give great advice and thanks for sharing your story! A true role model! Blessing Andrea!

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    Andrea Reply:

    Thanks — we had a local artist do a pastel drawing of our house this summer. We love it too!

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  3. Jaime

    12/13/2017

    We pay our mortgage on a biweekly basis, which equates to making one full payment extra each year that goes towards principal only. We also have a set extra amount deducted with each payment and applied to the principal. Jumping ahead on our amortization schedule has saved us thousands and we are set to pay our house off in a third of the loan time. I highly suggest people take a look at their amortization schedule and see how just a little extra leads to big benefits!

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    Andrea Reply:

    Way to go – paying off that mortgage more quickly. It will be such a relief when it’s GONE!!!

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  4. Beth

    12/13/2017

    We do the same thing. Whenever our friends ask how we save money, I tell them “I’m really, really good with money I don’t ‘see’ so I make sure I don’t see a big chunk of it.” LOL. I will say that our biggest financial benefit is from tithing though. When we told our financial advisor that we had committed to tithing 10% and our finances basically exploded (in a good way) from that point on, he told us “I see it all the time.” Having a trustworthy financial advisor is also a huge benefit. We use Thrivent Financial and have been incredibly happy with them.

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    Andrea Reply:

    LOVE this Beth!!

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  5. Olga

    12/14/2014

    Andrea,

    This is a great post! Thank you.
    I’d like to share something with you and your followers. When we first got married both of us had a well-paid job. Our pastor gave us good advice always to live on just one income but the lowest and save the bigger one. My parents lived a content and frugal live and taught me always to give the 10th of my income. We followed both principles within our 15 years of marriage and the result of it is: traveled to different countries, self-supported 3 years of school (without working while in school), bought a house while we had just my husband’s income, I stayed at home with our beautiful girls. Goal setting and chasing after them is hard work but brings amazing rewards!

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  6. Lynn

    12/11/2014

    You guys are wise beyond your years! Thanks for a great post! I’m going to look into having money transferred monthly into our Roth accounts – we use Edward Jones as well.

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  7. Kelly

    12/10/2014

    We use automatic deposits for savings as well, into our Roth IRA & college savings plans.

    Our checking and savings accounts are automatically linked, so for us, it doesn’t matter whether something is in checking or savings – it’s easily accessible and transferred online.

    So, we opened up a separate credit union account which is much harder to get into. We also found they had some nice interest rates, etc. compared to our usual bank (Wells Fargo). So, that’s where we keep our “emergency fund” and we are starting to build up savings in there, using an automatic transfer. It’s accessible if needed, but would take a lot of effort or at least a couple of days (in a true emergency, our credit card has a high enough limit that we’d be okay without immediate access to emergency fund).

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  8. Heart and Haven

    12/10/2014

    My family is intentional about retirement planning, but we are going against “mainstream” and NOT investing in 401K, Roth IRA, stocks, etc. Even though there are a lot of “pros” to this type of retirement savings, I also found too many “cons” for this risk-aversion person. The 2008 financial crisis certainly solidified my decisions as well!

    More people need to be prepared for the costs related to old age/retirement, so thank you for this post though! I think planning needs to be intentional and automated transfer is a good tool to use.

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    Jenny Reply:

    So what are you doing about retirement? Yes markets go down but over the long haul they do go up. If you just put it in savings you will lose money to inflation

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    Heart and Haven Reply:

    We don’t use savings for retirement either. We have rental properties that are already cash flow positive. The money that we would have otherwise put towards a 401K/Roth IRA, we’ve decided to put towards accelerated payments towards the mortgages. We are debt free besides our mortgages, and once they are paid off the rental income would more than pay for our monthly expenses. It would also be inflation-proof (ie. if inflation/cost of living goes up…so would rents). And since I also enjoy the property management aspect of it, it’s also a “fun” job for me as well! 🙂

    I know being a landlord/property manager isn’t for everyone though!

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  9. Heather @ My Overflowing Cup

    12/10/2014

    Unfortunately for us, we no longer make income that is consistent enough to use the benefits of automatic deposits, but when we did, it was one of the best things we did to save money. If it is at all possible, I, too, highly recommend this way of saving. It is possible to do a lot on a lower income. We just need to prioritize living below our means and saving every penny that we can. Thanks for the encouraging post, Andrea!

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  10. Rose

    12/10/2014

    Thanks for this!!!! I’m printingthis and giving it to my 22 year old son who is in the electrical union in Chicago…making way more money than he knows what to do with….He doesn’t really want to keep a conversation going with me about this topic…so, he’s going to read your positive ideas!
    Thanks a million!!!!!!!!!!!! I think all of us with young adult children should pass this specific article to our kids…Start early!!!!!!!!!!

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    SB Reply:

    Rose, introduce him to Mr money moustache. Very similar ideas in terms of savings rates.

    Thanks Andrea! Another great post

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    Shelley Reply:

    I would actually say Dave Ramsey. He is is Christian with solid money management plans that work. Mr. money mustache takes it too far, in my opinion-don’t drive SUV’s, etc. He also gave money to Planned Parenthood last year (which hurts my heart). Congrats to your son on his job

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  11. Jennifer M

    12/10/2014

    Hello, I am from Canada and my husband and I automatically put $75/month into our son and daughter’s RESP accounts — “Registered Savings Account Program”. You can look it up on-line if you want to know more information about it. Anyway, it has grown significantly since we have started. When you start investing when they are so young, the amount can grow significantly. We are so pleased that we started when they were six months old. I only wish I put money into my RSP “Registered Savings Account” when I first start to work in my teens. But of course I had other ideas for my money at the time.

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  12. Carlen

    12/10/2014

    I haven’t automated the savings yet, but I’m going to start that next year. I’m thinking of opening a savings account at a different bank so that it isn’t as easy to transfer between checking and savings.

    One of the best pieces of advice I’ve been given about retirement savings it to increase your contribution a little bit each time you get a raise. I work for the State, so there is a mandatory contribution %, but I also have an additional voluntary contribution. Every time I get a raise, I increase that amount for the first paycheck at the higher amount. I don’t miss the extra money because I didn’t have it before, and some of the raise still makes it to my budget!

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    Andrea Reply:

    I love that idea Carlen — definitely a great tip for anyone getting a raise in 2015!

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  13. Tammy @ SkipperClan

    12/10/2014

    Love reading your stories like this. Unfortunately we did not start off our marriage with these teachings or practices but we are making changes where we are. We are also in the process of putting two kids through college debt-free (one has enough saved with tuition to get there for sure and the second is just starting with a little help from us). Our friends think we are WEIRD for telling our kids college isn’t a ‘right’ and expecting them to work and pay for it in cash. We know how much stronger their futures can be when they start like what you have described here and want them to have the same possibilities when they are newly married that you described. Nothing teaches them the importance and discipline like having to work, plan, and save for it themselves. Keep it up, you guys are truly inspiring!!

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    Andrea Reply:

    Thanks Tammy – and better late than never 🙂

    yes, I totally agree with your mentality for the college kids. My parents could have afforded to send me to college with no debt — but requiring me to work, get scholarships, pay for most of it myself, etc. was a VERY wise decision on their part!

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    Katie Reply:

    As a young professional woman in her mid-20s, I can attest to the value of my parents making me pay for my own education. I took ownership of my college education, worked throughout my entire degree, and although I graduated with some debt, the payoff has been enormous – for both my career, work ethic, and knowledge of saving/spending/handling money.

    It’s tempting sometimes to be jealous of those whose parents paid for their entire education, but I remind myself how very fortunate I am to have the skills, motivation, and ambition that I have now… mainly due to bearing the primary responsibility for my college education! 🙂

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