Financial literacy · a life skill
Advanced Savings Automation
decide how hard each pound is to reach
A payday transfer gets money out of your current account. The advanced version decides where each part of it goes, and how hard it is to get back. Keep an easy-access buffer for the things you can't plan. Give every goal you can plan its own pot, its own date and a lock as firm as your temptation needs. Then let the orders run.
- Challenging
- Life-Changing impact
- Learn it: 30 days
- One buffer, one pot per goal
Beshears et al. (2015), 495 people splitting windfalls of $50 to $500. Both accounts paid the same interest.
The method
A buffer you can reach, goals you can't.
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Size the buffer
Add up a month of essentials: rent, bills, food, travel, minimum debt payments. Three months of that is a common target. It lives in easy access, in a separate account from your spending.
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Fill it first
Until the buffer is full, every payday transfer goes there. It's the money that stops a broken boiler from becoming a credit card bill, or a raid on a locked goal.
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Price every goal
Give each goal a name, a target and a date. What's still to save, divided by the months left, is its monthly order. If the orders add up to more than you save, a date or a target has to move.
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Match the lock to the temptation
A goal you'd never raid can sit in an open pot. One you might dip into gets a withdrawal charge or a notice period. A long one you'd talk yourself out of goes in an account that's fixed until the date.
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Roll the orders on
When the buffer is full, move its order onto the goals. When a goal is reached, move its order to the next. If you use the buffer, refilling it comes before everything else.
Size the buffer, fill it first, price each goal, match the lock, roll the orders on.
Example: Tomasz saves £600 a month. Their essentials are £1,500, so three months is £4,500, and they already hold £1,500. For 5 months, everything goes to the buffer. Then £215 a month goes to a holiday pot, £140 to a car account with a withdrawal charge, and £237 to a house deposit locked for five years. Each one arrives on its date.
The savings plan
Build the buffer, then the goals.
1 · What you save
2 · The buffer
3 · Your goals
Up to four. The soonest date is paid first.
No goals yet. Add one, or try the example.
4 · The plan
Your plan
Your numbers are kept only in this browser. Nothing is sent anywhere.
The research behind it
People asked for the lock.
John Beshears and colleagues gave people in a US online panel a windfall, from $50 to $500, and asked them to split it between two accounts. One let them take money out at any time. The other held it until a goal date they chose, up to a year away, and either charged for taking it out early or refused.
With both accounts paying the same interest, textbook economics says nobody should choose the locked one: the same return, less freedom. People put 39% to 56% of the money in it anyway, and the firmer the lock, the more they put in. Interest mattered too. With a 10% charge, one point more or less moved the locked share between 28% and 58%. Swapping the charge for an outright ban did about as much as that extra point.
A second experiment, with 550 people, tried a softer lock: no withdrawals unless you had a financial emergency, with you as the only judge of that. It drew 45% of the money, no more than the 10% charge, and less than the outright ban. Offered a charged account and a locked one side by side, people put twice as much in the locked one.
Read it with care. These were small, one-off sums in an online study, not a pay packet over years, and the results are about what people chose rather than how much they saved in the end. What carries over is the preference: people who know they'll be tempted ask for locks, and firm ones. A way out that only needs your say-so isn't much of a lock. That's the buffer's job.
The idea
Why it works.
Most of us value today a little too much compared with later, and most of us know it. A lock is a decision made by the calm version of you, on behalf of the tempted one. It only works if it holds when the tempted one is in charge, which is why a firm lock beats a promise to yourself.
The buffer is what makes a firm lock safe. Without one, the first real emergency turns a locked goal into a penalty or a debt. With one, the lock only ever stands between you and a want, never a need.
When it goes wrong
Habits that help.
- Lock nothing until the buffer is full. A lock without a buffer is a trap, not a plan.
- Name the pots. “Lisbon, June” is harder to raid than “Savings 2”.
- Check the cost of the lock. Read what an early withdrawal would cost before you choose an account, and whether the rate is worth it.
- Review once a year. Essentials rise, goals change. Resize the buffer and reprice the goals on the same day.
Go deeper
Keep going.
- Simple Savings Automation
- Deliberate Savings Automation
- Advanced Savings Automation
Resources
Keep this going in the app.
HourLife turns these ideas into a daily system — goals, habits, focus, and reflection in one private place.
