As Canadians, we all know the importance of saving money for our future. However, it can be challenging to stick to a consistent savings plan when there are so many other financial obligations to consider. That’s where automatic savings plans come in. In this blog post, we will explore the benefits of automatic savings plans and how they can help you reach your financial goals.
What is an Automatic Savings Plan?
An automatic savings plan is a pre-authorized agreement that allows you to automatically transfer money from your bank account to a savings account or investment account. You can set the frequency of the transfer and the amount you want to save, and the rest is taken care of automatically.
Benefits of Automatic Savings Plans
- Consistency
One of the main benefits of automatic savings plans is consistency. When you set up an automatic savings plan, you know that money is being transferred to your savings or investment account on a regular basis, regardless of how busy or distracted you are. This consistency helps you build a solid savings habit and stay on track towards your financial goals.
- Ease of Use
Another benefit of automatic savings plans is that they are easy to set up and use. Most financial institutions offer this service, and it only takes a few minutes to set up. Once set up, you can monitor your savings or investment progress online, making it easy to stay on top of your finances.
- Diversification
Automatic savings plans can also help you diversify your savings and investment portfolio. For example, you can set up an automatic transfer to a high-interest savings account, a Tax-Free Savings Account (TFSA), or a Registered Retirement Savings Plan (RRSP). This diversification helps you spread out your savings and investment risk, reducing the impact of any single investment on your overall financial picture.
- Increased Savings
Lastly, automatic savings plans can help you save more money. By automating your savings, you remove the temptation to spend money that should be saved, which can result in significant long-term savings. Furthermore, automatic savings plans can be set up to increase the amount saved over time, making it even easier to reach your financial goals.
Conclusion
In summary, an automatic savings plan is a powerful tool that can help you build a consistent savings habit, diversify your investment portfolio, and ultimately reach your financial goals faster. If you’re not currently using an automatic savings plan, consider setting one up today to take advantage of these benefits. With a little bit of planning and discipline, you can set yourself up for a financially secure future.