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5 Ways You Can Automate Your Finances

Did you know that automating your finances is one of the easiest ways to stay on track to reach your financial goals? The truth is, as motivated as you might feel to accomplish your money goals, it can be tough to stay the course. When you automate your finances, you’re removing the “human element” from your financial strategy. Not sure what that means? Let’s look at an example.

You want to save $10,000 by the end of this year in your emergency savings fund, save up for a cruise in June, max out contributions to your 401(k), do a better job of budgeting your “eating out” money, and pay down your smallest student loan (using the debt snowball strategy).

Those are some big financial goals, and you start the first few months of the year off strong. Then, after the initial excitement of pursuing your goals wears off, you get the opportunity to take a trip with a few friends to Arizona. The sunshine and warm weather sound like a much-needed break from midwest’s cold and snow, but you hadn’t really budgeted to take a trip until June (when you would have had enough set aside enough money to pay for the trip in cash). You have a few options:

  • Don’t take the trip to Arizona
  • Pay for it with credit
  • Halt a few of your other financial goals to pay for the trip with cash now

You know that paying for the trip with credit isn’t in your best interest, and you really want to take the trip – so you consider stopping the extra payments to your student loan, and the contributions to your emergency savings. Because you manually make those payments or deposits each month, it’s easy to “skip” this month in order to help fund your Arizona trip.

Here’s the thing: I have no doubt that you’re incredibly motivated to accomplish all of your financial goals. However, too often, we get distracted by different curveballs that life throws at us. Automating your finances can help you to sidestep these distractions, make empowered money decisions, and keep moving toward the things that truly matter to you.

Wondering what parts of your finances you can successfully automate? Let’s dive in.

#1: Loan Repayment

If you haven’t already automated the loan payments you make each month, do it ASAP! You can also automate any additional loan payments you plan on making throughout your repayment strategy. This can help you to stay on track to reach your goal of becoming debt-free, whether you’re using a debt snowball or a debt avalanche strategy.

#2: Budgeting

Although some people prefer a classic pencil-and-paper budget, I like the accessibility and ease that comes with using technology to keep you organized. Apps like Mint or YNAB (You Need a Budget) are a huge help when it comes to giving every dollar you have available a “job.” The best part? You’re in total control with these apps. They track your progress, but you get to decide how the budget is organized. This helps you to create a plan that’s best for you – then monitor whether or not you’re sticking with it. It also helps you to prioritize the expenses that matter most to you. That might mean contributing to your children’s education savings, giving to charity, or focusing your “extra” spending on experiences over more “stuff.”

#3: Charitable Giving

By automating contributions to a donor-advised fund, you’re able to build some tax efficiency into your financial plan while still giving an automated amount to charity every month (or even every pay period).

#4: Bill Pay

As you grow in your career, your financial life will inevitably become more complex. You might buy a home, a car, enroll your kids in daycare – the responsibilities keep adding up, and that means one thing:

Your bills keep adding up, too.

Make things easier on yourself by automating your bill payments wherever you can. You may even be able to set up payments that correspond with when you get your paycheck direct-deposited into your account to save yourself further headache and hassle of making sure your funds are all in the right spot when a bill gets auto-paid from your account.

#5: Savings

Whether you’re trying to build your emergency savings, save up money for a big-spending goal (like a trip, a house down payment, or a new car), or want to boost your retirement savings account balance – automation can help you get there. Here are just a few ways you can automate savings:

  • Set up automated contributions to your 401(k) that come out of every paycheck
  • Create an automated contribution to your cash savings account from your personal checking every month after you get paid

Leverage a savings app – like Acorns or Digit – to save small amounts automatically to be used for big-spending goals.

Want Help?

If you want more ideas for putting automated systems in place to help you achieve your financial goals, our team would love to help. Contact us today to learn more about our financial planning services!