PocketCoinage

Automatic transfers can help make your life easier.  They can save you time, build savings slowly, or even pay bills so you do not incur a late fee.  However, if you are not careful, you can potentially find yourself being charged bank fees!

Here are some examples that could lead to over drafting on your bank with automatic transfers:

• Irregular income
• Overspending
• Delayed pay due to a holiday
  • This seems to happen where I work.  If a holiday falls on a Monday, we would not see the money in our account until Friday.  We normally get paid on Thursdays.

Personally, the only automatic transfer I have is right from my paycheck to the 403b.  The only other automatic transfer I would consider is putting money away into savings directly from my paycheck.  This is before I have the chance to spend it!  I would never have an automatic transfer pull from my checking account on a certain day.  I know too many people that have been hit with bank fees from their bank due to automatic transfers.

I perform all my transfers and pay bills manually once I know my check cleared and the funds are available to me.  It takes me about 10 minutes or less every pay period.  This method has probably saved me from countless bank fees over the years.

If you are considering automatic transfers to pay bills or save, be sure you will have enough money on your account when the time comes.  Otherwise you may see some nice bank fees on your next statement.

Have you ever been hit with bank fees due to automatic transfers?

Automating your life can make things a lot easier.  A great example is the morning coffee.  You prepare it the night before and set a timer.  By the time you awake, the coffee has already brewed and is ready for your enjoyment.

The same thing can be said for savings; set it up and enjoy!  Automating your savings can get you on the right path to retirement, vacation, college, emergency fund, or whatever you have your mind set on.

Automation Through Your Employer

Probably the best way to automate your savings is through your employer.  Like most companies out there, they probably offer direct deposit into a checking account.  If you talk with them, they may be able to divide up your pay into multiple accounts by a fixed amount or a percentage of your salary.  By doing this, you can put away regularly without thinking about it or “seeing it” in your check.

Automation With Your Bank

You can also automate transfers with your bank.  My bank, ING Direct, has the option of automating a transfer from a checking account to a savings account.  This is another great way to save money without thinking about it.  It’s also an alternative if your employer does not offer the ability to send your pay to multiple accounts.  It also gives you a little more control over your money.  For example, you can login and change the amount at anytime.  With your employer, this change could take a few pay periods to kick in.  Plus, you may get a regular check instead of a direct deposit while the changes are processed – this is a huge inconvenience for me.

The only downfall to the automatic transfer with your bank is the risk of inadequate funding.  For example, my employer normally deposits on every other Thursday.  If a holiday falls on a Monday of that pay period, the deposit does not get made until Friday.  If I do not time the transfers accordingly, I could end up incurring non-sufficient funds (NSF) fee with my bank. This is something I avoid doing like the plague!

What I Do

Personally, I only automate 403b transfers direct from my employer.  Every pay period I sit down and transfer the money where it needs to go.  This gives me a better understanding of my money and where it goes.

However, I feel the best way to automate would be to have your employer make the deposit for you.  This way you avoid the NSF fee and you don’t “see” the money.  By having my employer deduct my 403b, I do not “see” how large my check would be.  Over the course of two years, I have a decent amount put away for retirement and I do not miss it in my check!

If I decide to automate my savings, I will allow my employer to make the transfer over my bank’s automatic transfer.

Do you automate your savings?