This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.
Automating your finances is one of the best things you can do. Read on to learn how it can help you in the new year.
Image source: Getty Images
Making smart choices about what to do with your money can sometimes be difficult — especially since the easier and more fun option is often to spend today without worrying about tomorrow.
If you want to maximize the chances you’ll accomplish the personal finance goals you’re setting for yourself and end up with the security you deserve, there’s one particular money move you should be sure to make in 2024.
This is the one thing you absolutely need to do with your finances in 2024
If you only do one thing with your money in 2024, you should set your finances up so contributions to your retirement and savings accounts occur automatically without any effort on your part.
Specifically, you should arrange to have money taken out of your checking account as soon as your paycheck comes — before you have a chance to spend a single dollar. You should move some of this money into your brokerage account and some into a savings account depending on whether you’re saving for long-term or short-term goals.
Figuring out how much to move into these accounts will mean setting financial goals. For example, you can use the calculators at Investor.gov to figure out how much to save for retirement each month to end up with about 10 times your final income (a quick and simple way to estimate your savings needs).
And if you’re saving for a big purchase, like a house or a vacation, figure out how much money you’ll need and what your timeline is so you can determine the amount to save each month. So, if you wanted to save $10,000 for a home improvement project in two years, you’d do the math to find you must save about $416 a month to achieve your goal.
As soon as you know the amounts you need, you can go into your bank or brokerage account and arrange to have those amounts automatically transferred each and every month. Or, if you’re contributing to a workplace 401(k), you can work it out with human resources. Set it up so you don’t have to do anything, and so the money is withdrawn before you get a chance to spend it elsewhere.
Here’s why automating your contributions works so well
Automating your finances so contributions to savings happen automatically is one of the surest paths toward financial success. That’s because saving the money you need becomes the default action that requires the least effort. You don’t have to choose to save each month — you’d have to consciously choose not to and go to the trouble of turning off your automatic transfers in order to fail at your goals.
See, most people just stick with the status quo, especially if the current situation is one that’s beneficial to their long-term goals. In fact, one Vanguard study showed that when new hires were automatically enrolled in a workplace 401(k), 9 in 10 participating employees were still contributing to their retirement account three years later.
So, give it a try for yourself this year and see if it can work for you. Once you’ve set up your automatic contributions, you’ll likely be well on your way toward accomplishing all your financial goals this year. In fact, you will succeed, unless you make the conscious choice to undermine your efforts.
Alert: highest cash back card we’ve seen now has 0% intro APR until 2025
If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
More from my site
I’ll Never Have a Perfect 850 Credit Score. Here’s Why I’m Fine With That
3 Reasons to Open Another CD Before the End of 2024
Is a Costco Membership Worth It for a Household of One?
Is $10,000 Enough Money to Keep in Your Savings Account?
I’ve Been a Costco Shopper for 18 Years. Here Are the Best Tricks I’ve Learned
I’ve Used Over 20 Credit Cards. Here’s What I Look for When Opening a New One
