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5 best practices for automating your finances

What we'll cover

  • The benefits of automating your finances

  • Which accounts can be automated

  • Best practices for setting up automated finances

Between utility bills, subscriptions, loan payments, rent and adding to your savings account, it’s easy to get overwhelmed by all of the financial tasks on your to-do list each month. The stress stops now. Thanks to auto-pay, auto-transfer and auto-investment technology, you can save the time and cash. And the perks of automating your routine finance tasks don’t end there. 

The benefits of automating your finances

The most immediate advantage of automatic finances comes from the payments you’re able to schedule. By ensuring your bills are paid on time, whether you’re at home, work or even on vacation, you can avoid late fees and dings against your credit score. 

Another payoff is the ability to automatically contribute to your savings goals. We’ve all got financial targets we’re aiming for, whether it’s to save a certain amount every month, every year or by the time we retire. In this case, that timeless saying, “Out of sight, out of mind,” can work in your favor. With just a few clicks to set up transactions, your money will move where you want it to go — and before you know it, you’ll have more in your savings, retirement and/or investment accounts.

If you’re worried about automated payments or transfers accidentally overdrawing your account, set up alerts from your bank account or service provider to remind you when a bill is due and what the cost will be. That will give you a chance to adjust as needed.

What accounts can you automate?

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. If it’s a recurring payment, you can probably schedule it. Common automations include:

  • Student loans

  • Car loans

  • Home mortgages

  • Rent

  • Credit card bills

  • Phone bills

  • Internet bills

  • Cable bills

  • Electricity and gas bills

  • Water, sewer and trash collection bills

  • Insurance premiums

  • Childcare payments

  • Subscriptions

  • Charity payments

Have a landlord who only accepts checks? Most banks can send automated checks to individuals or companies directly from your checking account. 

Before you set up your automated transfers, it’s important to get organized and identify how much money you have coming in and out — and when.

How to set up automating your finances

If you’re new to scheduling electronic payments, it’s normal to be a
little apprehensive. We’ve mapped out key steps and best practices below to get you started:

1. Determine your cash flow

Before you set up your automated transfers, it’s important to get organized and identify how much money you have coming in and out — and when. Map out paydays, as well as due dates and average costs for bills like rent or mortgage payments, utilities, insurance, groceries and childcare. And don’t forget other expenses like home items, subscriptions, memberships, social outings, vacations and gifts. 

Look back at your transaction history over the last few months to
identify patterns and calculate an educated estimate of how much you will have in your account. By doing this work upfront, you’ll be able to determine the best dates to schedule automatic payments and transfers without overdrawing your accounts. 

2. Set up automatic bill pay through your bank

Whether it’s rent, utilities or cable subscriptions, monthly bills never take a break — and it can quickly become overwhelming to manage them all. The good news is most banks offer online bill pay automation so you can set up your monthly payments in one place. Not only is automating bill payments convenient, it can help you avoid an overdue bill, which is critical for boosting and maintaining a top-notch credit score.

3. Set up direct deposit

Remember, automating your finances isn’t just for the money going out, it also can apply to the money you have coming in. Many employers have moved to offering direct deposit options instead of doling out physical checks. This service is faster, easier and only requires your bank account and routing numbers to set up.

4. Automate contributions to your savings

You know the phrase, “pay yourself first.” It makes sense in theory but is much harder in practice. Whether you’ve been eyeing a certain pair of shoes or want to splurge on a fancy dinner, it’s tempting to skip moving a percentage of your salary or paycheck into a savings account and use that money for something else.

Give yourself a head start by automatically placing a percentage of your paycheck in your savings account. Use automated savings tools to set up recurring transfers either on payday or the day after, so you know you’ll have a sufficient balance. The sooner the money is moved, the faster it will begin earning interest.   

5. Automate retirement and investment contributions

It’s never too early to save for and invest in your future. Some employers take out a portion of employees’ paychecks and put it into a 401(k) or other retirement accounts before paying them. But if you’re hourly, part-time or self-employed you may have to set it up yourself. (Don’t worry, we’ve made it easy .) Set up automated contributions to directly withdraw from your checking account into an IRA, Roth IRA or SEP IRA on a cadence that works for your finances.

Maximize your dollars with minimal effort

Life gets busy, and many of us go about our days with so much on our minds: work, family, home, social calendars and so on. Automation is a super easy way to keep money flowing into your bank account while cutting down on time spent managing your money. Avoid missing payments, build your savings faster and set yourself up for a successful financial future. 

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