Stop wasting your hard earned cash on late fees and start automatically saving money before you have a chance to spend it. Thanks to auto pay, auto transfer, and auto investment technology, you can save hours each month on money management, and use your newfound free time to focus on all the things you’d rather be doing, like making more money.
For even more tips on how to automate your finances, head over to my YouTube channel Wander Wealthy.
What Can You Automate, Financially?
Almost anything. Almost every service provider, from student loan administrators to utility companies, provide automatic payment options that can connect to a bank account or credit card. Even most credit card bills can be automatically paid. Have a landlord that will only accept checks? Most bank accounts provide automatic bill pay options that let you send automated checks to those individuals or companies straight from your checking account. Below is a list of the bills you should be able to pay, automatically, each month.
- Student Loans
- Car Loans
- Credit Cards
- Phone Bills
- Internet Bills
- Cable Bills
- Electricity and Gas Bills
- Water, Sewer and Trash Bills
- Insurance Premiums
- IOUs or Debt owed to individuals
But it’s not just “paying” that you can do automatically, you can also save and invest automatically. Whether you have an automated withdrawal into a 401(k), Roth 401(k), HSA, another retirement benefit provided through your employer, or you connect your own IRA, Roth IRA, or SEP IRA (for the self-employed) to directly withdraw from your checking account, automated investing is a thing – and it’s powerful.
Let’s not stop there. When you have some major goals to crush in the short-term, it’s wise to save for them. Open up separate savings accounts with no monthly maintenance fees for each of your savings goals and set up automatic transfers to start automatically saving towards your next big thing.
Why Should You Automate Your Finances?
When it comes to bills, you can easily avoid getting into the financial trouble that comes from paying them late. Save money on late fees, save your credit score from taking a dig, and never have your internet or electricity cut off again.
By paying your loans on time, you’ll reduce the amount of interest owed in addition to saving on late fees and keeping your credit score up to snuff.
Automating your retirement savings is wise, especially if your employer offers matching contributions (take full advantage of those), but you should also automate your investments to leverage dollar cost averaging–A.K.A. not trying to time the market–and capture as much time to maximize interest accruals as you can.
Let’s admit it, sometimes we might promise ourselves we would budget and plan to save $100 by the end of the month. But, then end of the month came, and we didn’t have two cents to scrape together, let alone that goal of having an extra $100 to spare.
What we should have been doing was saving first. With automated savings, we remove that $100, what could have been mistaken as “spending money”, by setting it aside right when we are paid. By reducing the amount of money we can spend, automatically, we then increase our savings rate, automatically. What they say is true: “Out of sight, out of mind.”
But What If…
Afraid your bills may fluctuate and you won’t be able to afford them one month? For bills that tend to fluctuate, you can usually set up budget billing–a functionality that many service providers, like electricity and gas companies, offer to help you keep your bills affordable–spreading the months of peaks and valleys across the whole of the year.
Scared you’ll lose track of these bills or your bank account won’t be prepared for the withdrawal of an automatic payment? Having the bills come out at a strategic time can help ensure you have enough money to cover your basic needs. You can also set up alerts from your bank account or service provider to remind you when a bill is due and what the cost will be.
Timing is everything, so make sure all of your most important loans, bills, and investments get withdrawn automatically, within a few days of your monthly paycheck. This can help ensure that you can’t spend the money that you owe. Get paid multiple times per month? Call up your service providers and find the best dates you can pay each of the bills. Split them up accordingly so you always know you can afford what is coming due.
With just an hour or two of work on the front-end, you can get yourself set up with an automated money management system. You’ll be spending less time actively managing your money each month and have all that free time to focus on things that are more important, more fulfilling, and more fun for you. Set a date in your calendar to setup your automated system, make the phone calls you need, and finally free yourself from the monthly headaches of paying bills.
Want more great tips on how to optimize your money and manage it all? Check out more of my content at Wander Wealthy on YouTube, and see what else I’ve been cookin’ up with the Ally Do It Righters over here.
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Tess Wicks is the founder of and voice behind Wander Wealthy, a podcast and YouTube channel for millennial women who want to make smart and savvy financial decisions. She is a wealth and mindset coach, who provides tools and education for online coaches and service-based entrepreneurs.