If You Didn't Make This Financial Move in January, Make It Now

For some people, January is a happy time from a financial standpoint. That's because their paychecks go up once their annual raise has come through.

But once your raise arrives each year, a really smart thing to do is set up an automatic transfer to your savings account so that your extra money lands there automatically. And if you didn't make that move in January, it's certainly not too late to make it in February.

The importance of automating savings

A big reason so many people struggle with savings is that they spend their money during the month and hope that by the end of it, they'll have some cash left over. But when you take that approach, you often set yourself up to fail.

That's because you're apt to be tempted by different purchases during the month. And while giving in is the natural thing to do, it's also the thing that could be hurting your savings goals.

That's why automating your savings is a better bet. If you arrange for some amount of money to leave your checking account each month and land in your savings account, you may be more likely to stay on track.

Now the reason it's a good idea to set up an automatic bank transfer at the start of the year is that typically, that's when raises come in. And it's smart to send your raise to savings before you get used to having the extra money available.

But at this point, we're still early in the year. So it's definitely not too late to send your raise into savings if you can afford to do so.

Of course, not everyone gets a raise. So if you're in that boat, you may find it more difficult to part with a portion of your paycheck. But if you're able to automatically transfer even a tiny amount -- say, $20 or $25 a month -- it could go a long way in the course of a year.

Prioritize your savings if your emergency fund isn't complete

It's one thing to automate your savings to meet a goal like buying a new car or purchasing new furniture. But if you don't have a complete emergency fund, then it's especially important to put your savings on autopilot. Without a solid emergency fund, you might instantly land in debt the moment an unplanned expense arises.

Of course, you wouldn't be alone there. Recent data from SecureSave finds that 63% of Americans are not able to cover an unplanned $500 expense from savings. But the reality is that anyone in that boat is extremely vulnerable to taking on costly debt, and that's not where you want to be.

At a minimum, you should aim for enough emergency savings to cover three months of essential bills. If you're not close yet, don't panic. Having some savings is better than having none.

But still, in that situation, it's really important to get yourself on a solid savings path. And automating your savings could be your ticket to doing just that.

So if you didn't take that step in January, take it now. The sooner you do, the sooner you can improve your financial situation in a very meaningful way.