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Using Automatic Transfers to Easily Reach Your Goals

Using Automatic Transfers to Easily Reach Your Goals

If your employer doesn’t offer direct deposit, you can still put savings on autopilot. Use automatic transfers through your bank. An automatic transfer is a transfer, or “payment,” from your checking account to another account either at your bank or an investment account you’ve established.

For example, you can tell your bank that you want to schedule an automatic transfer of $100 on the 3rd and 18th of every month from your checking account to your “Family Vacation” investment account and $125 to your child’s college savings account.

With direct deposit, your employer transfers the money directly to these accounts—bypassing your checking account. If you don’t have access to direct deposit, automatic bank transfers add another step, but once set up, they run seamlessly and automatically without any other effort or action on your part.

This is an example of “pushing” funds to another account. You are telling the bank, “Please send money to such and such account for me.” Your communication and instructions are with your bank. You can also “pull” funds into an account. Many brokerage firms and college savings accounts allow you to schedule regular transfers from your bank. Here your communication and instructions are not with your bank, they are with the institution where you have your other account.

How do you know if you should push funds from your checking account or pull funds into a savings or investment account? It all depends on where the money is going. For example, if you tell your bank to transfer to $250 into ABC Brokerage account every two weeks, they will gladly transfer the money. Once the cash gets to your investment account at ABC Brokerage, it will stay in cash. You would then have to call ABC Brokerage or login to your account and invest the $250. That’s good, but it’s not quite “autopilot.”

If you complete paperwork that lets your brokerage firm pull $250 from your bank every two weeks, you may also be able to tell them exactly where you want to invest the $250. By pulling the funds into your investment account from your bank, you eliminate a step.

How do you know how much and where to transfer funds? Complete the worksheet from the previous lesson.

The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.


About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

Reach us at (949) 305-0500