At this week’s LearnVest LIVE 2014 in New York City, LearnVest founder and CEO Alexa Von Tobel asked a panel of successful women how they deal with money.
Carley Roney, cofounder of publicly traded lifestage media company XO Group, which runs popular websites like The Knot and The Nest, was on the panel and offered some great insights.
“If you had to think of a money trick that’s worked for each of you, what’s the biggest thing that’s helped you be successful personally?” Von Tobel asked the panel. “If you had to give your child one piece of advice, what would it be?”
Roney’s answer was simple: “It’s actually saving automatically. That simple thing: You do not and will not remember any of it, so setting up things and having automatic deductions.”
When Roney talks about automatic deductions, she means designating portions of your paycheck to go directly into savings, whether that’s an emergency fund or a retirement account. Many personal finance experts champion this tactic, which limits temptation and lessens the possibility of human error.
“I’ll tell you guys, I’m the biggest fan of ‘out of sight is out of mind,'” Von Tobel responded. “Your paycheck hits, and that next day should be an automatic deduction of as many hundreds of dollars as you can spare. I will tell you: If it is not there, you will not spend it. If it is there, you’ll spend it.”
Setting up automatic deductions is as simple as making a quick phone call to your bank, or in many cases, logging on to your bank’s website and designating a monthly money transfer. Von Tobel, who is also a certified financial planner, clearly believes this small change could make a big difference: “We could change the whole country if everybody did that.”