How to Create an Automatic Savings Plan

1. Determine Your Savings Goals

Begin by deciding what you're saving for, whether it's an emergency fund, a down payment on a house, money for a vacation or something else. Estimate how much you'll need, set a date for reaching your goal and work backward from there to figure out how much to save every month.

Tip: Don't have a specific goal in mind? If your budget allows, saving at least 10% of your take-home pay for short-term savings goals is a good place to start, according to Fidelity. Separately, try to direct 15% of your pretax income to long-term retirement savings.

Learn more: How Much Should I Save Each Month?

2. Make a Budget

Depending on your income and expenses, you may need to revise your budget (or make one for the first time) to reach your savings goals. List your monthly income as well as essential and nonessential expenses. If necessary, look for ways to reduce spending and free up money for savings.

Learn more: How to Make a Budget

3. Choose a Savings Account

If you don't already have a savings account, you'll need to open one. Opening an account at the bank where you have your checking account is the simplest option; transferring money between accounts at the same bank is convenient and fast. But you can also set up electronic transfers between two different banks by linking your two accounts, so it's worth shopping around to see if other banks offer higher interest rates.

For example, online-only banks frequently offer higher interest rates and lower fees than brick-and-mortar banks, and are equally safe if they're insured by the Federal Deposit Insurance Corp. (FDIC).

When comparing savings accounts, consider factors such as fees, withdrawal limits and how easily you can access your money. Also compare each savings account's annual percentage yield (APY), which measures the expected rate of return you'll earn from compound interest.

Traditional savings accounts typically don't earn much interest. As of January 2026, the average APY on savings accounts was 0.39%. High-yield savings accounts (HYSAs) usually earn much higher APYs than traditional savings accounts: As of the same period in 2026, HYSAs offered APYs of 4% or more.

Tip: Some employers offer emergency savings accounts (ESAs) that deduct money from your paycheck and put it into savings automatically. Employers may even match your contribution. If your company offers an ESA, compare the features with other savings accounts you're considering to see which best fits your needs.

4. Open a Savings Account (or Two)

You can use a single savings account to save for one or more goals. However, if you're saving for multiple purposes, opening more than one savings account might make it easier to stay organized. Also called sinking funds, one savings account could be used for your emergency fund, for example, and another to save for a vacation.

You can usually open a savings account online or in person. The exact documents required may vary depending on the bank, but you typically need:

• A government-issued photo ID, such as a driver's license
• Your Social Security number or individual taxpayer identification number
• A second form of identification, such as your birth certificate or a utility bill with your name on it

Some banks require making a minimum initial deposit to open an account. You can usually make this deposit with cash, check or electronic funds transfer from an existing bank account.

Learn more: How to Open a Savings Account

5. Decide How to Automate Your Savings

You can automate your savings using a direct deposit split or recurring bank transfers.

• Direct deposit split: Some employers allow you to split your paycheck direct deposit among two or more bank accounts every payday. You can generally choose a percentage or dollar amount to deposit into each account. For example, you might have 90% of your paycheck deposited into your checking account, 5% deposited into one savings account and 5% deposited into a second savings account.
• Recurring bank transfers: If you can't split your paycheck direct deposit, you can set up recurring account transfers to automatically transfer money from your checking account to your savings accounts on a regular basis.

Tip: Some banks offer their own savings tools, such as features that round up debit card purchases and move the spare change to savings or transfer a small amount to savings each time you spend. While the amounts may be small, these tools offer a low-effort way to supplement your overall savings plan.

6. Set Up Automatic Deposits or Transfers

Setting up a split direct deposit of your paycheck is similar to setting up direct deposit for your checking account. Typically, you fill out an authorization form, specify the amount or percentage you want deposited into each account and submit a voided check. You'll need your bank's routing number and your bank account numbers. Check with your bank and your employer's HR department for specific steps. It may take one or two pay periods for the direct deposit split to take effect.

To set up automatic transfers:

1. Log in to your checking account online or in your bank's app.
2. If you're automating transfers to an external savings account, look for the option to link it to your checking account. You may be able to link instantly or may need to enter your account number and the bank's routing number.
3. Look for the option to initiate a transfer and choose the option for repeating or recurring transfers.
4. Choose a start date (and end date, if desired) and set the frequency that works for you, such as weekly, biweekly or monthly.
5. If desired, set an end date for the transfers.

Tip: Scheduling transfers soon after payday can reduce the risk of overdrawing your checking account.

7. Protect Yourself From Overdrafts

Sometimes an automatic transfer can leave your checking account without enough money to cover a transaction. If a scheduled payment doesn't go through or a check bounces, you may face overdraft fees or nonsufficient funds fees from the bank. There could be late fees from the creditor too.

You can prevent overdraft fees by signing up for overdraft protection, which automatically transfers money from your savings account when your checking account is overdrawn. However, since some savings accounts may charge fees if you make more than six withdrawals per month, it's best to limit withdrawals. Setting up automatic alerts when your checking account goes below a certain minimum amount can help you keep tabs on your balance and avoid unnecessary fees.

Learn more: Common Bank Fees and How to Avoid Them

8. Monitor and Adjust Your Savings Plan

Once you've set your automatic savings plan in motion, check your bank account regularly using your bank's mobile app or website. Make sure transfers are going through as scheduled and aren't triggering overdrafts or fees. Are you on track to reach your goal, or do you need to adjust your contributions?

Once you achieve a specific savings goal, you may want to redirect your automated savings to a different purpose. For example, if you've built a solid emergency fund, you could switch to saving for a down payment on a car or house.

If your pay is cut or you lose your job, you might have to reduce your automated savings contribution for a bit. However, try not to give up your plan altogether: Even small amounts can add up if you're consistent about saving. Just be sure to get back to your normal automated savings plan as soon as your finances allow.

Tip: If you get a pay raise, consider putting some or all of the extra income toward your automated savings plan. It's an easy way to save money faster without cutting back.

Frequently Asked Questions

Simplify Your Financial Life With Automation

Once your automated savings plan is in motion, consider automating other aspects of your finances. Setting up automatic bill payments could help improve your credit score; automating investing and retirement savings can get you to your financial goals faster.

Keeping tabs on your credit is another task you can automate. Experian's free credit monitoring automatically notifies you of changes to your Experian credit report that could signal fraud.