How much time do you spend managing your money each month – paying bills, checking balances, and moving funds around? Is it a few hours, maybe half a day? If you spend almost any time at all on these tasks, it’s probably more than you should. Using modern tools and apps, you can automate your finances to a near-zero time commitment each month.
The many transactions, transfers, and payments of managing household money add up to a massive collective drain on your time and energy. By setting up the whole system on autopilot, you can regain that time and energy, along with the peace of mind that your finances are stable, secure, and rocketing toward your future.
Automate Your Bills and Budget
From housing and utilities to everyday expenses, a typical household conducts hundreds of monthly financial transactions. Some, like a grocery trip, will happen no matter what. Others, like the phone bill, can easily slip through the cracks and cause further issues without suitable systems in place. And in all cases, tracking and organizing these transactions is crucial for maintaining financial wellness.
1. Online Bill Pay
If you still have to do the monthly chore of sitting down to pay the bills, you are likely not taking full advantage of the modern miracle of automatic bill pay.
There are two general ways automated bill pay can happen:
- The “push” style, in which you give the biller’s information to your bank, which then sends (or pushes) automatic payments on your behalf
- The “pull” style, in which you give your bank or credit card information to the biller, who then takes (or pulls) the money you owe directly from your accounts
Push-style bill pay is preferable when available because it offers you additional safety and control over how much of your money goes out and when. However, for bills that aren’t always a fixed amount, like utilities and credit card payments, pull-style ePay might be the only option.
Between these two methods, it is now possible to automate practically any bill, payment, or expense.
However, try not to let the luxury of eBill pay lull you into ignoring your bills entirely. Even if you don’t need to do the manual chore of paying them, it is still wise to keep an eye on the amounts and know what you are spending on everything.
2. Use Apps to Track Your Budget
There are conflicting opinions on traditional budgeting. Some experts uphold that households should closely monitor every individual expense and category to maintain healthy spending. Others advocate a more lightweight approach to budgeting. But practically all agree that everyone should periodically review their spending and occasionally adjust their habits.
Awareness of where your money is going and how much you’re regularly spending is one of the most impactful things you can do to improve your financial situation. Even so, very few people do it. One of the main reasons is that it’s a chore; it takes a lot of time and is not usually very fun.
Automating your budget tracking drastically reduces the workload of it, making it much easier to keep up the habit.
Numerous financial apps like Mint and YNAB make this process incredibly easy by automatically tracking and categorizing your monthly expenses, savings, and more. All that’s left for you is to pop in and spend a few minutes a month looking over the results!
3. Set Spending Limits
If you struggle with impulse purchases and overspending, as many of us do, technology may have a solution.
Some credit and debit cards allow you to set a spending limit on your account. Separate from your credit limit on that account, a spending limit is a barrier that acts as a reminder when you hit a spending amount you don’t want to exceed.
These limits act as a modern counterpart to the more traditional analog option of the envelope system, in which you can limit your spending in different categories by placing set amounts of cash into separate envelopes. The envelope system has been a popular strategy for decades and has helped many people drastically improve their spending habits. Automated spending limits bring those benefits forward into the era of digital transfers and electronic payments.
4. Pay Down Debt While You Sleep
If you followed the step for automating your bill pay, you likely have most of this part already figured out. Auto-payments are a game-changer for those aiming to get themselves out of debt.
One household’s debt can potentially consist of dozens of individual loans, liens, and lines of credit, each with its own terms and monthly payment. Paying these manually is a huge hassle, not to mention the risk of fees, interest, and harm to your credit if even one payment slips through the cracks.
Setting up auto-pay for the minimum payments on all your debts is a massive step toward financial security, but you don’t have to stop there. If getting out of debt quickly is one of your current financial goals, consider setting up an auto-payment above the minimum. Ideally, try this on just one debt at a time, and watch as they melt away, one by one.
Automate Your Banking and Saving
Saving money may seem boring on paper. Unless, of course, that paper was a balance statement showing how much difference a steady saving habit had made in your life over time. Be that as it may, the real-life impact of enthusiastically saving money can be monumental over the years.
Better yet, you can do almost all of it on auto-pilot. Automating your savings not only takes the stress and work out of the equation but also improves one’s ability to save more. Here’s how you can take advantage of it.
5. Save With Auto-Transfers
One piece of money advice you hear so often that it’s become a cliche is to “pay yourself first.” I.e., direct some of your income toward your savings and goals before paying for anything else. Some things become cliches for a reason. Prioritizing saving like this helps you make room for future goals alongside day-to-day life.
Auto-transfers make it easy to pay yourself first on a regular schedule without even needing to think about it. Automatic transfers, such as a monthly deposit from a checking to a savings account, help you gradually build your stockpile in the background while you continue living your life.
Most online bank accounts will offer this option. Log in and check to see if you can start auto-saving right away!
Of course, you can always save additional money each month on top of this baseline. Automating it simply gives you a minimum accomplishment tacked onto your wealth each month.
6. Avoid Fees With Overdraft Protection
One of the more overlooked keys to wealth-building is the importance of avoiding fees and other unnecessary costs. A late fee or extra charge here and there may seem like a minor nuisance, but these can drastically cut into your wealth potential over time.
Overdraft fees, in particular, can be a devious (and unnecessary) expense. Americans fork over billions of dollars in overdraft fees each year. But for most, it is largely avoidable with a bit of automation.
Check to see if your bank offers overdraft protection. There are a few ways of doing this, but one of the safest is simply pulling in the necessary funds from a linked account. For instance, if you overdraw your checking account, you can ask your bank to automatically pull funds from your savings account to cover the cost and avoid a hefty overdraft fee.
This method will only work so long as you have the money somewhere to cover your purchase, which will not always be the case. So this type of overdraft protection isn’t a silver bullet against running out of money. However, for avoiding unnecessary costs due to simply losing track, overdraft protection is a slam-dunk win for automation.
7. Set up Alerts, Rest Easy
Similarly to setting spending limits on an account, you can use automated alerts to add stability and security to your financial life without unnecessary stress and hassle.
Alerts for unusual expenses, international charges, and overspending in a given category can all help you sleep easy, knowing that you are monitoring your finances without constantly monitoring them with your own eyes. Credit monitoring alerts can also inform you about potential malicious use of your identity and data.
There are multiple ways to set up these alerts to your preferences and concerns. The best places to start would be with your bank or credit card company, or any financial tracking and budgeting app you use.
Automate Your Investing and Financial Goals
Like bolstering your cash savings, investing for the future often benefits from reducing day-to-day human involvement. By relying less on excellent investing habits and instead letting the robots take the wheel, you can put your investment portfolio in a much better position for growth.
8. Cruise to Retirement Automatically
There is a massive advantage to employer-sponsored retirement plans like pensions and 401(k)s that doesn’t get nearly enough attention. And no, it’s not the enormous tax advantages or baffling power of compound interest. It’s not even the employer matching.
Of course, those are all fantastic benefits and huge components of why these accounts are so valuable. But you likely already knew about all those things. The thing that quietly makes these accounts so much more valuable than all of that is that they are automatic.
Employer-sponsored plans were engineered to help people accumulate wealth passively. Without tools like this, most people struggle to consciously and consistently set money aside for retirement. If you have access to accounts like this, taking advantage of them is one of the best things you can do for your financial future.
Even those who don’t have access to employer matching plans can give themselves the same opportunity with an IRA setup with monthly automated contributions.
9. Boil the Frog Toward Your Financial Goals
Boiling the frog is a strategy whereby you start something slowly and painlessly and then make consistent, gradual increases in your approach. This line of thinking can be used in many ways, but personal finance and boiling the frog are a perfect fit.
For instance, to save money, boiling the frog might mean starting with a tiny monthly contribution and then increasing it in small increments once or twice a year. Or with retirement savings – imagine you begin by saving 6% of your paycheck into a 401(k). Then, you could increase that amount to 6.5% or 7% a year from now. One small, barely noticeable step at a time could end with you socking away 10% or more of your monthly income for retirement without negatively impacting your lifestyle.
Some banks and many 401(k)-esque plans allow you to take this option automatically. You can think of this as a sort of meta-step to some of the other forms of automation we’ve looked at so far: In addition to automating your savings or retirement contributions, you can also automate the process of gradually increasing them.
10. Up Your Regular Investing Game With Robots
Historically, investment advisors such as brokers and accountants have been instrumental resources to regular people in choosing and managing their investments. Today that is becoming less and less the case for everyday investors.
So-called “robo-advisors” like Betterment and Wealthfront now offer households many tools for investing and financial planning. These apps can help select investments based on your timeline and risk profile, and even help with strategic maneuvers like dollar-cost averaging and portfolio rebalancing.
They can handle most of what you could ask of a traditional advisor at a fraction of the cost, and best of all, they can do it automatically in the background. All you have to do is keep putting money in and let the robots handle the rest.
11. Automate Your Distributions
In addition to automating your money into your investments, you can also automate it on the way back out to you. Whether in traditional retirement, some stage of a FIRE journey, or at any other time you’re ready to start drawing down on your investments, automation can help.
Regular, automated distributions from a retirement plan or other investment account add predictability to life at a time when stability is most welcome.
Having a clear idea of your monthly income, even when you’re paying it yourself, helps you budget and keep your spending level. It also offers peace of mind knowing exactly how quickly you’re drawing on your nest egg so it won’t run out prematurely.
Automation can be a gift at every stage of your financial journey, not just at the beginning.
What NOT to Automate
It is crucial to note that while almost every inch of your financial life can be automated, not every part of it should be.
In most cases, like the ones we’ve looked at here, automation can save you boatloads of time and emotional energy in managing your money. And for things like moving money around, paying the bills, and contributing to your goals, this works swimmingly. But there are a few places where your finances will still greatly benefit from a human touch.
While robots and computers handle the day-to-day “finance” side of your personal finances, you will still want to remain present in the “personal” part.
Things like setting and adjusting your money goals, deciding the path you want to take to reach them, and generally figuring out the type of financial life you want to live are all matters that deserve your real, human attention. And by letting automation handle all the boring parts, you’ll free up your time and energy to focus on these more important issues!
Set It and Forget It: The Automatic Path to Wealth
You can now find apps, tools, and features to automate almost every stressful or tedious task associated with personal finance. These tools can save you significant time and energy, all while supporting better financial habits and helping you build your future.
The luxuries of the information age have made the routine of sitting down at the kitchen table to manage household finances a near-obsolete task. There are some things, like pursuing financial goals, that will always be worth a bit of hands-on attention. But with everything else automated and out of the way, you’ll have all the time you need for that.