How automation can help saving money with Plum 💸

Despite our best intentions, it sometimes feels as though there’s always some reason why we can’t afford to save quite as much as we’d like!

If you’re one of the many people who live from paycheck-to-paycheck, it’s easy to get stuck in the endless cycle and begin to think that saving more money is just something that other people do.

There will be times when your financial situation means that it’s simply not feasible to tuck money away. That’s life. But there are other hurdles facing savers… and these are often as much about human nature and proper budgeting, as they are the actual monthly income available 💰

Before we get into the mechanics of how automating your finances can help you to save more money over time, let’s remind ourselves of why having adequate savings is so important.

Why save money for the future?

Having an adequate buffer of money saved (or at least having a plan in place, with defined savings goals) is a crucial aspect of personal finance.

Even if you’re not quite ready to think about your retirement plans just yet, the habit of sustained budgeting and saving can have huge benefits in your life. You could pay off any outstanding debt, clear your overdraft or create an emergency fund, which can even help protect you from falling into debt should you be faced with an unforeseen financial expenditure.

It’s not fun to think about, but an emergency fund can be a lifesaver if you suddenly need to pay for expensive car or home repairs, you lose your job, or you become seriously ill and can’t work for a prolonged period.

In these situations it’s all too easy to rely on your credit card or overdraft. But by preparing in advance, you’ll be less likely to fall foul of the monthly fees and punishing interest rates that plunge you further into debt (also affecting your credit score in the process).

What does automated saving mean?

When we talk about automated money saving, we’re referring to the process of using machines (specifically, computers) to transfer money... without humans needing to think about it!

Automating your savings is like putting your financial planner on autopilot 🧑‍✈️ At the most basic level, a standing order is a way of achieving this, though the really smart money management apps like Plum (shameless plug alert) can tailor the amount they set aside by calculating your available balance, budgeting style and spending habits.

What are the benefits of automated saving?

Automating deposits to your savings account is a proven way to help you save more! The principle is that people who automate transfers to a separate savings pocket will save more money than those who simply stash the money left in their bank account at the end of each month 📆

The aim is to consistently save more money over a prolonged period of time, and automation is simply a tool to help achieve this.

Here are our top tips for automating your savings 🤖

Money saving tips

Tip 1: Pay yourself first

Creating your budget or savings plan is one thing… but sticking to it over the long-term is quite another. So, once you’ve decided how much you should be saving, here’s a way to help make sure it happens!

This piece of budgeting advice is as simple as it is effective. The idea is to immediately transfer your planned savings out of your current account or checking account, and into a designated savings pot.

When you pay your future self first, it can help prevent you from impulse spending money that should be put to better uses.

If your savings are already ring-fenced, it means your account balance is more reflective of what you can actually spend, and managing your budget becomes more intuitive. Out of sight 👀 Out of mind.

Tip 2: Rely on AI (Artificial Intelligence)

Saving money can feel like a struggle to begin with, but once you’ve become accustomed to regularly setting a certain amount aside, you might even find that there are months when you can save a little more.

This is when a traditional standing order, for a fixed amount, can hinder your progress… because if the money isn’t transferred to your savings account when you first get paid (see tip 1) it may not be there at the end of the month. Money has a habit of disappearing like that 🙈

An automated savings app like Plum is powered by AI, and can use Open Banking to analyse your spending and make the amounts you auto-save dynamic. Plum can adapt to deposit more when you have some spare cash, or rein back the savings if things are looking a bit tight that month.

Plum’s algorithm has been designed to complement budgeting features like Pay Days, which can be configured to take a set percentage of your wages when you first get paid. This ensures you pay yourself first, and unlike a standing order from your bank, it means the actual monetary amounts will automatically be adjusted to reflect any pay rises.

Tip 3: Make saving fun

One of the reasons we often struggle to save money is because it requires us to forgo immediate gratification in favour of long-term fulfilment… and that isn’t something us humans tend to like doing, left unchecked.

By taking some of the pain out of the process... and maybe even making it feel a little fun, we can help improve our chances of success 🤑

You can automatically Round Up your transactions to the nearest pound and set aside the spare change. So you can have fun, guilt-free, knowing that you’re saving money each time you splash the cash.

If you use an advanced money saving app like Plum, you can even gamify the saving experience with fun saving rules like our 52 Week Challenge 📆 or Rainy Days Rule ☔️

If that’s not enough, you can keep track of your spending by creating and customising saving Pockets that allow you to assign monetary goals. Because when you set targets, it can help you reach them quicker!

To learn more about Plum you can check out our website.

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