Where to Automate Your Finances

Why You Should Automate Your Finances

If you want to know why automating your finances is a practical move, consider my personal example. I have busy the last couple of weeks with family issues (helping a relative get back on their feet) and juggling my temporary assignment with my freelance work. I’ve decided I’m doing too much and I have been cutting back on my hours across the board.

The good news is our cash flow hasn’t suffered (it’s actually improved) and one reason is that our bill pay and finances are pretty much automated. Without automation we would probably be late on some payments. We developed this system so we can check our balances once a week for 5 minutes to make sure everything is running smoothly.

Automating your money can pay off when you're swamped.

Automate Your Savings

Start small and automate your money to put into joint and/or individual savings. You’ll hardly notice the slightly small paychecks as you start build up your emergency fund.

This step can help you build financial cushion, especially in turbulent economic times like these. Find an FDIC bank or CUNA credit union in your neighborhood that offer high interest rates for savings and watch it grow faster.

Automate Paying Bills

Most banks and credit unions offer this money and time saving feature. It took less than an hour to set up most of our bills with our joint checking  account. We only need around 20 minutes a month to pay bills.  Once you set your online bill pay system up, it’s very easy to maintain.

We took copies of our bills and set them in a pile. I entered the bill names, addresses, due dates, account numbers, and bill amounts with our bank.  You can set the bills up to be recurring, where it will pay it automatically for you. If a bill changes from month to month, I just login and change the amount. The bank takes care of the rest.

Automate Your 401(k) and IRA Contributions

Check with your Human Resource department  at work and see if your company offers a match on employee contributions and how much is it. Another benefit to contributing to your 401k is that the contribution money is taken pre-tax, which can reduce your taxable income.

Once your build up your emergency fund, eliminated your credit card debt, and have increased your income; funnel some money into an IRA. You want to still look for low cost index funds to put your money in.

The two most important factors for obtaining the benefit of compound interest are the interest rate and the length of time your money earns interest. The latter is the most important; your investment will grow slowly at first, but over the long term you will see dramatic improvements.

Your Take

How much of your financial system is automated? We review our system time to time to see how we can improve. Personally, I’ll probably look at it again when Baker from Man vs Debt finishes his finance guide shortly.