How Automatic Savings Plans Can Help You Save More

Automatic savings plans rely on rules you set up that help you save money. Often, these automatic plans move money from checking accounts into savings accounts.

By automating the process, you take out the guesswork — and the need to remember — from your financial equation.

Takeaways:

• Research suggests that automatic savings can help people save money, even if they'd rather spend it.
• Saving with every use of a debit card is the most popular way to save, while making regular transfers comes in second.
• Regular transfers increased the dollar amount saved and achievement of savings goals by 1.5 to 3.5 times, in one study.
• Saving a small amount per day versus a larger amount per month could make savings goals feel more achievable.

The personal savings rate in 2025 has been increasing again after falling since pandemic highs, according to the Bureau of Economic Analysis. Despite inflation's impact, many people are concerned about broader economic uncertainty and socking more away.

Research finds that having a "savings mindset" can help people save more. The mindset can be learned through developing positive financial habits over time, understanding more about money and budgeting, and in some cases, reframing your goal and your approach.

What is an Automatic Savings Plan?

As the name suggests, automatic savings use simple, regular transfers of money to your savings account, according to rules you set up. You can typically use automatic savings in conjunction with savings accounts, money market accounts, retirement accounts and youth savings accounts.

You can create financial rules to make transfers of specific amounts or at certain regular intervals, or both, to hit your savings goal.

Cons of Automated Savings: 

• If you don't have enough money in your checking account to cover a transaction, you could pay overdraft fees depending on your institution. 
• Read over the account agreements and disclosures regarding when money is moved to savings. You don't want to accidentally run short if larger bills come due, then bounce a check or payment transfer.
• If unexpected expenses come up, you may have to pause your automatic transfer.
• Automated savings plans need review, maintenance and updates to keep up with your changing needs or goals.

Types of Saving Plans

There are two main types of automated savings approaches — contingent and guaranteed. Contingent savings are dependent on spending, such as rounding up each purchase. Guaranteed rules happen on a consistent schedule, such as saving a set amount every Friday.

Contingent Saving Rules Approach

According to 2022 Consumer Financial Protection Bureau research, this is the most popular method of automating savings.

An example of contingent saving includes automatically rounding up debit card purchases (which pull cash from your checking account) to the nearest dollar. Then, the rounded-up amount is automatically transferred to savings.

For example, BECU's Save-Up Automatic Savings tool relies on your debit card swipe on everyday purchases. * Your spending amount will be automatically rounded up or a flat amount will be transferred into your savings account.

Guaranteed Savings Approach

This is the second most popular way to save. Ways to implement a guaranteed savings plan include:

• Time-based: Set up regular automatic deposits of a specific dollar amount into a savings account, such as weekly, every two weeks or monthly. These are called recurring transfers and can help you build a savings habit.
• Paycheck-based: Saving a set amount from every paycheck.
• Percentage-based: Set aside a dollar amount (or percentage for every sale for business owners and self-employed entrepreneurs).

According to research from the CFPB, this approach led to the highest amount saved monthly due to larger transfer amounts, which meant savers were more likely to reach their savings goals.

People saving with guaranteed automatic savings plans saved twice as much ($167.84) as those who used contingent saving ($80.36). But even for those who use contingent approaches, regular transactions can add up to a healthy amount.

Example of an Automatic Savings Plan

Ashley wants to save money for a down payment on a new car. Typically, Ashley's whole paycheck is delivered to her checking account through automatic deposits.

Ashley checks with her employer and credit union and finds out her paycheck could be split into checking and savings. So, she decides to save money from every paycheck, which she receives by direct deposit every two weeks.

Ashley first reviews her spending and budget to see how much she can put toward her monthly savings goals. She realizes she can make a fixed amount of $300 per month or $150 per paycheck.

Ashley sets up a system to automatically transfer money every two weeks when she receives her deposit. As her savings grows with regular transfers, she also earns interest on her savings and further interest on the interest — known as compound interest.

Ashley can check her savings progress at any time, as the recurring transfers happen.

Setting Up an Automatic Savings Plan

Financial institutions have different systems and options, but generally, these are the steps you'll need to take to set up "guaranteed savings" transfers:

1. Select the account you want to transfer to and from.
2. Select the frequency you'd like it to occur.
3. Choose a date you'd like the transfers to begin and end.
4. Select the number of transfers (one time or unlimited).
5. Select the amount of money you want to transfer.

Considerations for Setting Up Automatic Savings Plans

1. Set an attainable goal: Consider your overall financial situation and what you want to save for. Choose one goal to start with.
2. Reflect on what works best for you: Think about which type of automatic savings plan you want to set up — one that will automatically round up, or a larger one that relies on regular transfers on payday or another date.
3. Compare plans: Review the plans available to you, whether through your bank, credit union, an online financial institution or an app.
4. Select accounts: Think about where you want to save then access your accrued funds.
5. Select a frequency: This is how often you want the transfer to happen and may include the first transfer date. Are you transferring weekly, every other week, monthly or on pay day?
6. Dollar amount: Consider your budget and how much you can save but still have enough to pay your bills and essential expenses.

Other Ways to Automate Saving Money

Here are some other ways you can use automatic savings transfers:

• Add money to a money market account.
• Open a CD with an add-to feature, if your financial institution offers them. (Some BECU CDs have this option.)
• Add money to high-yield savings accounts, if your financial institution offers them. (BECU doesn't offer HYSAs.)
• Contribute to a retirement account or investment account directly from your paycheck.
• Contribute to a child's 529 account.
• Small business owners and self-employed people can save for quarterly tax payments.

Level Up: Improve Your Automatic Savings

Research shows that your savings successes are improved when you tweak your plan occasionally.

1. Put all savings contributions into one savings account to benefit from simplicity and compound interest.
2. Compare interest rates between savings accounts and money market accounts to see which is better for you.
3. If impulsive spending is a temptation, try sending automatic savings to a second, external account to make it harder to immediately access funds.
4. Set up multiple automatic savings plans when you have more than one major purchase. Different tools, like BECU Envelopes, can help you earmark your savings for different uses.
5. When you receive a raise, boost your savings rate by adding the raise amount to your recurring transfer versus using it to spend impulsively or on other expenses.
6. As a big goal, try to put away at least 10% to 20% of your income.

Automatic Savings Summary

Overall, you benefit from improved financial security by setting up an automated savings plan. Automating your savings is a good first personal finance step toward your financial goals and eases saving money. 

However, research found that automatic savings tools can lead to not paying enough attention to your finances. Even automatic savings plans you set up need tune-ups, and updates as your income increases or decreases.

If you start with a small portion of your paycheck directly deposited or round up purchase amounts, your bank account can grow without much effort.

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