Savings on Autopilot: Increasing the Auto-Transfer Amount
I have been automatically transferring a certain amount of money from our checking account to savings account on payday for quite a while. At first, $300 was moved every two weeks from our checking account at Bank of America to savings account at Emigrant Direct as part of our “pay ourselves first” strategy in order to save a little more without any intervention from us. With the scheduled transfer, we make sure that saving is always ahead of spending.
Later on when I switched from Emigrant Direct to FNBO Direct, I increased the bi-weekly auto-transfer amount from $300 to $400 last July. The increased limit had no noticeable impact on our spending for the past half year and we almost made no withdraw from savings account to meet our daily needs.
Last night, after reviewing interest rates of our two main banks, FNBO Direct and IGoBanking, I decided it’s time to make IGoBanking our default savings account because IGoBanking’s interest rate of 3.90% APY is slightly better than FNBO’s 3.85%. At the same time, I also re-directed the auto-transfer from FNBO to IGoBnaking. Since I had to delete the scheduled transfer at FNBO and create a new one at IGoBanking, an idea occurred to me as I was entering the transfer amount: “Why not transfer $500 every two weeks instead?”
Yes, why not? Having to create a new schedule is an excellent opportunity to increase the auto-transfer amount because the autopilot strategy means “set and forget” and I indeed always set and forget. So I entered $500.
Will it make a difference this time? I don’t know. If it does, we can always go back to what has worked for us. If it doesn’t, then we just save $200 more every month without having to make any hard choice 
*Photo from aeronorthwest.com
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I agree that the auto transfer is a great tool to use for savings. I have auto transfers set up not only for our emergency fund but for our other savings goals as well. We are saving for a wedding so my fiance and I set up auto transfers into a joint account we opened specifically saving for the wedding. We also have a small auto transfer going into an account for birthday and christmas gifts. After the wedding we want to set up accounts with auto transfers for vacations and cars. I also have auto transfers for our car insurance that is due every six months.
Being able to set it and forget it makes saving so easy.
It’s not exactly the same, but upping your 401k contribution when you get a raise is amazing. You never see the difference, but you’re both saving more and getting a fatter paycheck.