Where to Automate Your Money
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How do you feel about managing money? Is it something you enjoy doing or do you see paying the bills, knocking out debt, saving for your future, etc. a bit much?
When we started off as newlyweds, it honestly was little overwhelming. Part of it was we were trying to tackle too many goals at once. The other?
We hadn't learned how to automate our money.
Why You Should Automate Your Finances
After we sat down and established clearly what we truly wanted to do, automating much of financial system has been a wonderful blessing for us.
We've paid off over $30,000 of debt, bought our cars with cash, investing for later, and giving more.
Another huge benefit of automating our finances? It's saved us when we've been dealing with more important things.
Through the years, we've had to take a step back to help out loved ones and deal with our family. With two little ones as our priority, we sometimes have put money on the back burner.
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 on automatic.
Without automation, we would probably be late on some payments since things come up and we can forget.
We developed this system so we can check our balances once a week for 5 minutes to make sure everything is running smoothly.
Make Your Debt Payments Automatic
Whether you're going with a debt snowball or avalanche method, automating your debt payments is a smart move.
Getting your debt payments started is as simple as getting the minimums and extra payments with them scheduled.
Make sure it's early enough so you avoid getting hit with late fees.
Automate Your Savings
Life happens, so something that we knew we needed was an emergency fund. Tucking away a stash can be simple if you pay yourselves first.
Start small and automate your money to put into joint savings. You’ll hardly notice the slightly smaller paychecks.
This step can help you build a financial cushion, especially in turbulent economic times like these.
Want to keep it safe and earn a bit more? Find a FDIC bank or CUNA credit union in your neighborhood that offers high-interest rates for savings.
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.
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 log in 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.
Besides getting some free money from your employer, contributing to your 401k is that the contribution money is taken pre-tax, which can reduce your taxable income.
Don't forget to look at stashing away some money into an IRA. You want to 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.
Automate Extra Mortgage Payments
Once you've paid off your high-interest debts, socked away some savings, and set up retirement contribution, sit down and see if you want to pay your mortgage off early.
Even rounding up to the next hundred dollars can shave off years off your loan and what you pay in total over the course of the mortgage.
Your Take on Automating Finances
How much of your financial system is automated? We review our system every few money dates to make sure it still fits our current situation.
This post was originally published in July 2015. It has been updated July 2019.
Great guide to automation and its benefits!
Thanks! It’s been creating out of necessity. We just don’t have the time to track every penny.
We automate all of our credit card and bill payments, and our saving. We’ll automate paying extra toward our mortgage as soon as we close (a week from right now, eek!).
We’re not quite to the point of automating IRA contributions, because of the house and saving up money for our down payment and a big buffer. We’ll max them out for the year in early April after selling some stock from my old company, and then set up automatic contributions at that point.
Putting the right systems in place has been really helpful to just running things on auto-pilot and not having to remember to do stuff. It’s a lot easier to save money when your bank takes care of the transfer instead of me having to remember. 🙂
Some good ideas. I like the idea of re-evaluating every 3 months for potential changes. Depending on how many credit cards you’re dealing with, it’s good to avoid paying a lopsided balance on any single card. Good post.