Money Management

4 Ways to Automate Your Finances

It’s fair to say that most people know they should be saving more and may even have a goal in mind that they aren’t currently hitting. Part of the problem is that we see how much is in our checking accounts and think of all the ways we could spend that money instead of setting it aside like we should. This can stop us from transferring funds to a savings account or even paying an essential bill because we don’t think we can afford it.

The truth is that sometimes the most painful part of spending money is seeing it leave your account. That’s why taking advantage of automation can help you to save money, pay essential bills, and even invest painlessly. Here are four examples of how you can automate your finances:

Use recurring payments and automatic bill pay option
In today’s world the vast majority of your bills can be paid online. Furthermore most companies will now allow you to set up automatic payments so that you never pay late or miss a bill again. Sometimes signing up for these services will even come with benefits such as waived deposits, reduced transaction fees, or other perks that make opting in a no brainer.

That being said you should also be cautious about which bills you allow to pull from your account automatically. While ensuring that you pay essential bills like your utilities on time is certainly important, other accounts you might have can be easily forgotten. For that reason be sure to keep a master list of all of the accounts you autopay so you don’t end up wasting money on services you no longer use.

Set up transfers to a savings account
Another way to avoid temptation and ensure that you’re saving is to make it so that a portion of your money goes directly into a savings account. There are a couple of methods for doing this. First many banks will allow you to set up monthly transfers from your checking to your savings account for a set dollar amount. Alternatively, if your employer offers direct deposit for your paychecks, you may be able to request that they put one amount in your checking and the rest in savings. In some cases you may even be able to have them automatically set aside an actual percentage of your net pay so that you can be sure you’re saving enough (10% is a good first step).

Make 401(k) contributions
Speaking of employers, one of the best ways to save money for retirement it to take advantage of your company’s 401(k) plan. Not only are your contributions automatic but most employers will even match your funds — that’s free money! It should be noted that 401(k) funds are typically invested so there is some financial risk involved. However, with the added benefit of employer contributions, it’s almost certainly still worth doing.

Invest using apps
With the advent of FinTech there are now many new and innovative ways to save and invest. One example is an app called Acorns, which rounds up your transactions to the nearest dollar and invests that loose change in a selection of stocks and bonds. Another investment app that allows for automatic withdrawals is Robinhood. You can arrange to make deposits into your account on a weekly, monthly, or quarterly basis, ensuring that you’ll have the funds to nab the stocks you want when it’s time to buy. To read more about how both work check out  our Acorns vs. Robinhood App Review.

Whether you want to save a certain percentage of your income for retirement, build up an emergency fund, or set aside money to invest, automating your finances can be a great option. Of course, while it may be less painful to not see the money leaving your account, you will still want to do routine audits of all of your finances just to make sure everything adds up and you aren’t losing money. As long as you do that, these four suggestions will help set you on your way to saving more money without even feeling it.

Also published on Medium.

Other Articles by Jonathan Dyer