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Automate Your Finances

How to Automate Your Finances in 5 Easy Steps

Financial Wellness

Why Should You Automate Your Finances?

Automating your finances is the single most important step you could take to set yourself up for financial success.

First, taking control of your money should not be about discipline or willpower.  We all have busy lives.  There is not enough time or willpower to constantly work on your finances and make sure your money is going where it’s supposed to.

Second, by automating your finances you are putting yourself first.  Think about it.  When most people get a paycheck, they pay the government first (taxes), then they pay the bank (mortgage, student loans, credit cards, car loans, etc.), then they pay other bills and hope that there is something left over at the end of the month to put into savings or investment account.  Guess what?  Usually, there is nothing left for saving or investing.  That’s why 29% of Americans have less than $1000 in savings!

If your financial plan is not automatic, you will most likely fail.  Spend a little bit of time upfront, automate your finances, and go about your life not worrying about your money.  At the end of each month, you will have peace of mind that you’ve hit your investing and saving goals, paid all your bills on time, and can spend whatever is left over guilt-free.

Which accounts can you automate?

Girl working on her finances

These days you can automate virtually every aspect of your finances.

Investing and saving

  • Start with your employer-sponsored retirement accounts. Run, don’t walk to your HR department and enroll yourself in 401(k).  Make sure you max out your retirement contributions each year.  Many employers will also match your contributions up to a certain percentage.  Take advantage of it!  It’s FREE money!
  • You can also set up automatic contributions and investments for your IRAs (individual retirement accounts) and other non-retirement accounts.
  • Saving for various money goals such as emergency funds, kids’ college education, down payment on a home, summer vacations, or whatever else rocks your boat could also be automated.

Bills and spending:

  • Mortgage payments and rent can be automated through autopay or bill-pay
  • Credit card payments
  • Utilities
  • Your kids’ school lunch account
  • You name it! Almost anything can be automated.  In fact, the vendors like to know with certainty that they will get paid automatically.  That’s why oftentimes they offer you a discount or another incentive for setting up automatic payments.

How to set it up

Setting it all up will take you a bit of time, but it’s totally worth it.  Remember, it’s the best thing you can do for your financial present and future.  Here is how to do it:

1. Figure out where you want your money to go

I am not a fan of budgets.  They make you feel like a failure because it’s very hard to stick to one on a consistent basis.  Having said that, you should have an overall idea of where your money goes every month.  I find using apps like Mint or Personal Capital very useful in keeping an eye on your expenses.

The goal is to have at least 10% of your paycheck invested for retirement.  Add another 5-10% for other savings goals.  The balance should be split between fixed costs that you have to pay every month (mortgage, rent, utilities, debt, etc.) and discretionary spending (going out, clothes, shoes, hobbies, etc.).

2. Set-up employer-sponsored retirement contributions

Set up your 401(k) with HR.  Match the employer’s contribution.  Connect your paycheck to your 401(k), so it’s automatically funded each month.

3. Direct deposit your paycheck

Make sure your paycheck (after the deduction to 401(k)) is directly deposited into your checking account.  Give your HR a copy of a blank check and they will set up an automated direct deposit in no time.

4. Connect your investment accounts

Log into your investment accounts (IRAs and non-retirement accounts) and connect them to your checking account.  From there, set up automatic money transfers from your checking account into your investment accounts.  I would also highly recommend setting up automated investments right after the money hits your account.  That way you will avoid timing the market and will invest on a consistent basis.

5. Connect your savings account

If you have your savings and checking accounts at different banks, make sure you connect the two.  Sometimes people open high-yielding savings accounts at a different bank.  Set up automated monthly transfers from your checking to your savings account.  Start with saving for an emergency fund, then hit your other money goals.

Another cool way to automatically save money each time you buy something is to use a roundup feature offered by the Ellevest Debit card.  It’s a smart and easy way to build up your emergency fund.

6. Bills and spending

Set up autopay for all of your bills using your credit card. Connect your credit card account and your checking account so the credit card bill gets paid automatically.  If a bill can’t be paid using a credit card, either set up autopay using your checking account or use a bill-pay option offered by most major banks.

7. Monitor your charges

I like to go over all of the charges once a month to make sure things are looking good and there are no fraudulent charges on any of my accounts.  Apps like Mint or Personal Capital are great for that because you can see all of your accounts in one place.  It takes me less than 10 minutes/month to go over everything.

How to Automate Your Finances in 5 Easy Steps

A key detail to make it all work – the dates!

Picking the right dates for your transfers is the key to making it all work.  The easiest way to avoid confusion is to get all of your bills on the same schedule.  Gather all your bills, call every company, and ask them to switch your billing dates.  There should be no problem doing that.

Let’s assume you are getting paid once a month, on the first of every month.

2nd of the month:  percentage of your paycheck is automatically sent to your 401(k).  The balance of your take-home pay is directly deposited into your checking account.

Give it a couple of days just in case.

4th of the month:  automatic transfers to your investment accounts and savings account;

6th of the month:  autopay your monthly bills.  Use a credit card when possible.  If not, do the automatic transfer from your checking account.

7th of the month:  automatic transfer from your checking account to pay off your credit card in full.  If you can’t pay off your credit card in full every month, DO NOT use it!  Use your checking account for all the bills and expenses instead.  Carrying revolving credit card debt is the surest way to a lifetime of financial slavery.

For all the ladybosses

If you are an entrepreneur or a freelancer, most likely you have an irregular income.  This system can still work for you, with a couple of tweaks.  During the months that you make a lot of money, try to build a cushion for slower months.  Over time, your cushion will be big enough so you can simulate a regular income and use this system.

Entrepreneurs tend to pour all their savings and capital into their businesses.  A lot of times there is not much left for you to take home at the end of the month.  To avoid it, maybe consider paying yourself a small salary.  That way there is always money for saving and investing.  If you’re self-employed, you don’t have access to 401(K).  Instead, you should open a Solo 401(k) and SEP-IRA.

One last thing to remember – taxes.  As an entrepreneur, you are responsible for paying your own taxes.  Make sure you set aside around 40% of your income for taxes to avoid unpleasant surprises at tax time.

Increase your automated transfers over time

If you feel overwhelmed by the idea of putting 15% of your income for investing and saving, start slow.  Start anywhere you feel comfortable and slowly work it up to where you want to be.

The final piece of advice on automating your finances is finding a way to automatically increase your savings and investments over time.  Increasing the savings rate and making higher contributions towards your investment goals is a surprisingly powerful tool for building wealth.

You could set up automatic escalation for your automatic transfers.    Many online investment platforms will allow you to increase your recurring contributions on an annual basis. Same goes for many online banks.  If that option is not available, just put it in your calendar and do it yourself once a year.


Follow my 5 easy steps to automating your finances and go about your life not worrying about your money.

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