How can setting up automatic savings plans benefit an individual financially?

Setting up automatic savings plans is beneficial financially because it encourages regular contributions without requiring active decision-making each time. This consistent contribution strategy can help individuals build their savings over time, as they contribute a predetermined amount directly from their income, often before they have a chance to spend that money on other expenses. This method can enhance financial discipline and ensure that saving becomes a priority, leading to the gradual accumulation of savings or investment funds.

In contrast, avoiding all taxes on savings is not feasible, as savings may still be subject to tax based on account type or investment income. While automatic savings plans can lead to investment growth, they do not guarantee specific returns such as doubling investments, as investment performance is inherently uncertain and subject to market conditions. Finally, while automatic savings can simplify the saving process, they do not eliminate the need for budgeting entirely; individuals still need to manage their overall financial situation to ensure they live within their means and can meet other financial obligations.