Automating your finances means putting them in autopilot mode. You simply don’t interact with your money. Once the paycheck arrives, all transactions including bill payments and savings are automatically done. The money is systematically disbursed to different accounts opened for different purposes. Others are sent to creditors to pay the debts. 

Benefits of automating your finances

Finance automation helps you save time. If you are the kind of person who spends hours planning or managing finances, automation can be your saving grace. You won’t have to worry about forgetting anything or blotting bills. 

It’s also a good way to manage your income. Without money in your pocket, unplanned spending becomes rare. Meeting your financial goals becomes a walk in the park. All you need to do is come up with blocks of recurring expenses, then automate the deductions to be made every month without your involvement. That doesn’t mean not checking the operations of your account. It’s prudent to occasionally check where your money goes. In case you notice anomalies, you can correct them as easily and as soon as possible.

Financial automation is even more important for people with high budgets. When you have many transactions to carry out, errors can easily occur. It’s also possible to forget some important elements that you had budgeted for. With an automated finance system, such incidences are unheard of. Here are some tips for automating your finances. 

1. Open Different Accounts 

To begin your automation journey, you need to open appropriate accounts, starting with a personal checking account. This account will act as the central collection point for your funds. Once the money gets there, it is disbursed to the respective accounts in a predetermined schedule. Other accounts include retirement, savings, emergency funds, and mortgage. In simple terms, you are putting your expenses into groups.

To cushion your account against overdraft, don’t allocate your whole check to payments. Always reserve some funds in your account. This amount will service your bills in case bills exceed your income or there is a mismatch in timing. Different people have different preferences for their cushioning kitty. Some prefer 25%, 50%, or even 100% of their income. That depends on your income flow. If you have varying incomes, it’s important to have 100% of your budget as the cushion cash. 

2. Pay yourself first

Paying yourself first is financially magical. It’s a great way to attaining financial freedom. With technology revolutionizing money, paying yourself first has never been this easy. Through automated direct deposits, you just send funds to your retirement account when you receive them. Immediately the paycheck hits your account, direct a certain percentage to emergency or retirement accounts. This is meant to secure your future. You should fix this amount as a percentage of your income and should be done monthly. Alternatively, you can join the 401(K) plan. This is a pretax deduction and can be a huge plus on your finances. 

3. Set up Bills Autopay 

Now that you have simplified bills and accounts, it’s time to automate the payment. Both the traditional bank and the online system have a pay bill option. To set up autopay with your bank, simply login to your online banking portal. Fill in the billing information and their due dates. The good thing is that you only need to do this once. Some banks even have a provision to automate your bills through a smartphone.

Moreover, if you want to better manage your bills, you can use apps like Mint. These give you more freedom and flexibility in your payments. For example, you can set the app to track the dues dates and send you a reminder. You can also use a credit card to achieve a similar feat. Just like with banks, you log in to the online account and set up the billing information. The challenge with credit cards is that not all companies allow their use. Given a chance, you can rack up a number of benefits including bonus points and cash backs. 

4. Automate your investment contribution

After paying all your bills and saving, it’s time to think about investing. Setting up an automatic deposit to specific investment accounts enhances your financial goal achievement. If it doesn’t work well when alone, you can join an investment group. You can also mobilize your friends to come up with investment goals and work towards achieving them together. 

Conclusion 

Financial literacy should be a continuing process. By automating your finances, you are simply giving technology a chance to drive your budgets. Unlike the olden days, technology has eased monetary activities. You can do virtually everything without pocketing a single coin. This is not only convenient but also time-saving. Therefore, to achieve your financial goals maximize and maximize your time, automation is necessary. To start off the process, follow the steps above and you’ll be on your way to financial freedom.

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