Automating your finances is a great way to track your saving, spending, budgeting and investing. If you usually struggle to pay your bills on time or keep up with your savings, automating can help you learn to manage your money better. It can also reduce penalties charged for late payments. There are several apps that have been formulated to help people automate their finances, for example, Tiller, Qapital and Acorns, among others.
To get started, set up a direct deposit. If employed, opt to have your paycheck deposited directly into your account on payday, as this makes it easier to fill out paperwork online and thus automate all other payments.
Second, simplify your bills. This involves organizing them by the amount for each expense and the deadline for payment. All in all, it is better to settle your bills around payday.
The third step is to pay yourself. To start, deduct a certain amount from your paycheck and put it into a pension scheme. Saving 10% of your earnings is a great starting point in saving for retirement. You could also ask your employer to deduct a portion of your earnings and put it directly into your savings account. Additionally, set aside some money for entertainment expenses, groceries and non-recurring bills.
The fourth step is to set your bills on autopay. This can be done by logging into your online banking account and entering the billing information plus day and amount you’d like to pay each month. From there, the automation will be permanent and will occur monthly. You can also opt to pay from your credit cards by selecting when and how much your credit card should pay toward the bill each month. However, its important to consider that not all organizations accept credit card payments.
The last step in the automation process is to invest the rest of your money. Depending on which finance automation tool you use, you could have the actual investments chosen for you according to your investment profile, or simply have a certain amount added to your existing investments each month.
Bottom line, it is important to automate your finances to track your spending, to help in coming up with well informed budgets and to propel your investment journey.