automate your finances

Simplify Your Finances through Automation

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One of the best ways to pay yourself first, is to automate your financial life. In today’s digital world setting up the automation is simple and frequently requires talking to zero people! This week, I’ve been thinking about time management, and one of my big time savers/stress reducers is that I have my financial life working for me in the background.

Does your brain work in lists? This sure helps simplify that list constantly running through your head. And, if you are a control freak, fear not! Automating your life will still allow you to control a plethora of other daily tasks! (No need to control what the machines can manage.)

Automation shouldn’t equal fully ignoring your money, which is why I advocate for checking your monthly spending. With automation, I still check my credit cards using an app every week or so to make sure there aren’t any errors and transfer any cash rewards, but I don’t have to worry about when bills are due.

To simplify automation I like to put all of our expenses on credit cards (for the rewards points) and then I also don’t have to worry about if my cash is sitting in the correct account. But, check yourself, if the cash only method works better for you, that is fine. If you choose to use a credit card, the goal is to not spend extra money.

What should you automate?

  • 401k/Retirement Contributions
    • Set these to increase over time by 2% each month and adjust accordingly
    • Learn how their online system works
    • Confirm your money is going towards low fee index funds, and at most correct your asset allocation quarterly. Ours is 100% directed to the lowest fee broad fund. That keeps it simple.
    • If you prefer to front load, calculate when to drop your contributions to continue getting the employer match, then let it be. You only need to adjust it if you get a raise or bonus.
  • Credit Card Payments
    • Select a recurring payment to “pay in full”
  • Recurring bills: utilities, internet, insurance
    • Check for pesky fees, there’s typically one option that is fee free!
  • IRA contributions (I don’t do this…and instead contribute when my emergency fund is overflowing)
    • Contribute on the off weeks between pay periods or do what works for you!
  • Mortgage or rent payments

Automating our life helped us to increase our savings rate, which forced us to reduce our spending. I had read about the benefits of financial automation and paying yourself first repeatedly, and thought I was following the advice already. We were meeting our employer match on our retirement accounts and funding Roth IRAs, which led us to a 10-20% savings rate (compared to our 75% savings rate now). We inevitably found places to spend the extra money sitting in our checking accounts every month.

If any of that sounds familiar to you I recommend increasing your 401k contributions by 2% every pay period until the purse strings start getting tight. And, did you know, most 401k options allow you to automate that 2% increase? I know, I know, this is not what they told you at the retirement savings seminar. Mine, recommended increasing my savings rate by 1% every year! But if the goal is FIRE or flexibility, traditional advice does not apply.

Save yourself some stress and set yourself up for savings success by automating everything!

What do you automate financially?


6 comments on “Simplify Your Finances through Automation”

  1. Reply

    One of the things I automate is to keep a cash stash (for emergencies). I’m horrible with that – so I’ve automated a weekly withdrawal to be parked on my wife’s account 🙂

    go Kane Williamson 🙂

    1. Reply

      That’s smart! Keeping an emergency fund is key! And I always like to have a little bit of cash on hand.

      1. Reply

        I’m so glad I stumbled onto your blog – New Zealand has been on my two 5 places to visit (and possibly stay a while) since I was a child 🙂 I’ll follow you guys from now on.

        1. Reply

          Ah, sorry my name is a little tricky (after the fruit, not the country). I live in the Midwest of the US! Though I’d love to visit New Zealand too!

          1. ahh that’s just great – no wonder you didn’t get back to me on the kane williamson go part 🙂 but the midwest is great. I lived in Kentucky for many years. The best people in the world live in kentucky is what I say.

          2. Thanks for cutting me a break!

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