Saving, as easy as it is to say is not a very easy thing for many people. Taking money from your income to ‘put away’ into a savings account feels painful. Psychologically, at first savings feel like losing money because you have lost the opportunity to spend it.
That’s why saving through an automatic deduction from your monthly income feels easier because you never get to see or handle the money. Many banks provide a facility where a certain percentage of your salary is deducted automatically and channeled into a savings account.
This way you never get the temptation to divert your savings to another purpose.
Automatic savings can be one way of saving smartly it helps you to develop a clear savings plan because you have a fixed monthly contribution to you savings fund. If you a target like say, to buy a car worth five million Rwandan francs, and you can put away two hundred thousand francs every month for twenty five months. The automatic deduction will make sure you don’t reduce your monthly commitment.
It also eliminates time wastage through going to the bank to deposit money into your savings account every month hence avoiding the opportunity to procrastinate and skip your regularly scheduled contributions to your savings.
It is important to note that if one depends on a salary the day when the automatic deduction from your salary account to your savings account needs to be well after fifth of the month to cater for delays. In most banks if the sad day for the deduction arrives before the salary, your account will be charged hence the need to fact in a good date.
Your salary has been paid. If your salary is paid on the last day of every month ask your bank to do the deduction on the fifth of the month, funding my savings accounts without me even thinking about it. However, remember, you need to add your savings amount to your budget, just like any other expense.