Most of us want to save more, but daily expenses and small temptations can often get in the way. Even when we set goals, it can be difficult to stick to them month after month. One way to make saving easier is to remove decision-making from the equation. When we let systems take over, we can save without thinking too much about it.
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How default settings shape financial behaviour
Think about how we use mobile apps, bank accounts, or even social media. Most people go with the default settings that are already chosen for them. Defaults save time, reduce effort, and shape behaviour without much resistance. Similarly, setting up default financial actions can help effectively shape our money habits.
For instance, when savings are automated, the default becomes to save money first. Spending becomes secondary, based on what’s remaining. Instead of trying to save at the end of the month, the decision is made in advance.
Also Read: 8 Reasons Why Sips Are Key To Achieving Financial Stability
The power of automation for savings and investing
The idea of “set and forget” implies that you make a choice once, and then let the system run on its own. In the case of money, this means deciding an amount and frequency for saving, and letting technology handle the rest. This reduces the pressure of remembering every month. It also protects us from second thoughts like “maybe I’ll skip this month”. Small, regular transfers can potentially grow steadily over years, exhibiting the power of an automatic savings plan.
Simple ways to automate savings
There are several practical tools that make automation easy:
- SIPs (Systematic Investment Plans): You can set up an SIP automatically with your bank or investment platform. A fixed amount is invested in a mutual fund on a chosen date. This helps potentially build wealth step by step, without needing active monitoring.
- Salary-linked transfers: Many people ask their bank to run an auto transfer to savings account on the day the salary is credited. Even transferring a small sum immediately can help ensure saving before spending.
- Auto-increment features: Some banks and apps allow you to increase your savings amount each year. For example, you can increase your SIP marginally every year through a step-up SIP. As incomes can grow over time, this can help you save more without feeling the pinch.
Why automation beats willpower
Relying on willpower means making the same decision again and again. Each time, you have to resist spending and choose to save. This is tiring, and sometimes moods or desires can trump discipline.
Automation eliminates the need to make this choice repeatedly. Once set up, the money moves before you notice it. Over time, this can be an effective way to save money regularly, because it requires no fresh effort. Willpower may fail on a busy day, but a standing instruction may not.
How to set up systems for smooth savings
Creating your own system doesn’t have to be complex. A few small steps can make the process smooth:
- Select an affordable amount. A few hundred or thousand rupees every month may be a suitable place to start. You can always increase later.
- Choose a channel. Pick between a savings account transfer, a recurring deposit, or an SIP. Each serves a different need and caters to different risk appetites.
- Fix the date. For salaried professionals, linking the transfer to the date on which your salary is credited can make it easier. That way, you save before other expenses take over.
- Review once a year. While automation works on its own, it’s good to check if your goals or income have changed. Adjust the amount slowly, so it stays comfortable.
The goal is to make saving or investing so natural that you barely feel it.
Also Read: Smart Sip: Your Intelligent Path To Wealth Creation And Financial Freedom
Conclusion
Saving money can often feel hard because it asks us to fight our natural habits. Automation turns this struggle into a background process. By defaulting to wealth through an automatic savings plan or auto SIPs, we can reduce the need for daily discipline. Small sums saved regularly can add up to significant amounts over the years. Setting up automation may take only a few minutes, but the potential benefits can last decades.
At Bajaj Finserv AMC, we recognise that emotions are the cornerstone of investor behaviour – not just for investors but for investment professionals too. That’s why, behavioural finance is at the heart of our investment philosophy, InQuBe, which combines the Information Edge, Quantitative Edge and Behavioural Edge. By understanding, tracking and monitoring market sentiments and our own investment biases, we seek to make mindful and strategic investment decisions. Get the Behavioural edge by investing with Bajaj Finserv AMC. Read more about InQuBe here.
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