Are you struggling to manage your finances? Well, you are not alone. Many people consider financial management to be difficult and stressful. It doesn’t have to be. With advancements in tech and organizational financial tools, automating your finances has never been easier. Aside from ease, automation gives you control over your spending and could make it easier to achieve your financial goals. So how do you go about it? We explore below:
- Organize your expenditure
Before you can automate anything, you need to have a clear understanding of your monthly expenditure. Write a detailed budget indicating the allocations for savings, investments, bills and other expenditure. Also make note of when each is usually due and by what means it is paid. If possible, time the due dates to fall a few days after the day you expect to get paid.
- Save first
It is important to deduct your savings from your pay before you spend any of it. Think about it as paying yourself so that you can grow your wealth. Many employers are happy to deposit a part of your salary into a savings scheme and some may even match your contribution. Not only could this reduce your taxable income, it removes the temptation to spend money which was meant to be saved.
- Automate bills
Most of your bill payments can be automated. You only need to speak to your bank to set up standing orders for various recurrent expenses, usually for free or at a small charge. This takes away the stress of having to manually pay each of them when it is due, and could even save you money, for instance, from not having to pay late penalties.
- Set up an expense account
Treat spending money as a bill by itself. Figure out how much you will need for spending each month, automate paying that amount to an expense account once you have been paid. Then, spend from your expense account. This helps you control your spending since you will be limited to what is in the account at that particular time. Furthermore, since the money in it has already been segmented, you don’t have to worry about misusing money intended for a different purpose.
If you have taken all the above steps, congratulations! Your finances are on autopilot. Not only will your monthly bills be paid on time, you are also saving actively and are able to control your spending. Even better, you have already done all the hard work. The system is easy to tweak once it has been set up.