Isn’t there enough for you to think about in a day? Whether it comes to demands from your job, family, friends, relationships or just life in general, I’m sure we can all agree that it would be nice to let go of a few things. That, my friends, is where automating your finances comes into place.
The fact that we are in an increasingly digital age should come with no surprise. Well, how about using that to your own benefit 🙂 I know there are several areas of my life that I could arguably incorporate more automation, however there are a few minor tasks that I automate to make sure I’m on track with where I need to be.
The first example is that I have my monthly credit cards set up for automatic payment. Although this is a simplistic example, credit card interest rates are typically very high and just one month of forgetting to pay could be quite costly. Instead, by automating these payments I ensure that at the end of each pay-cycle I do not have to worry about missing anything.
Now, there are some folks out there who argue for avoiding credit cards as that can encourage more spending. Personally, I think if you have a relatively consistent budget and have the funds to always pay them off each month, a credit card can allow you to build your credit score over time. Additionally a perk of using a credit card is the ability to use the reward points you accumulate for things like travel; I personally love points and try to utilize them whenever possible. For example this summer I will be traveling long-distance for a wedding and will be able to pay for the round-trip flight only using points. No complaints here 🙂
Second, I have my student loan payments automated. Remembering to pay these each month can be quite a nuisance; I simply set it up a monthly withdrawal from my bank account. This prevents me from accruing any unwanted fees or potentially damaging my credit score. (This also applies to my credit cards as well).
The third example I can most readily think of is automating contributions to your retirement accounts. Personally, I have my 401-k contributions automated so that each paycheck a fixed percentage is removed and added to my retirement accounts, ensuring that I take full advantage of the match from my employer. This is important because any employer match is essentially FREE MONEY; you want to make sure that doesn’t go to waste! Check with your employer to see if you are eligible for a company match.
The last example of automation I will mention, though there are several more, could be setting up a separate savings/checking account that you automatically contribute to with each paycheck. I’ll be honest, it’s not easy to remember to save extra cash when everything is combined into one account. We all lead busy lives and often forget to “put money away”. Instead, if you were to automate this process by allocating a percentage of each paycheck to the separate savings account, you take away the headache of carving out the budgeted cash from your main checking account; it is already done for you.
The point I’m trying to emphasize is this; make things easier for yourself!! Automating your budget ensures you are on track for the goals you want to meet and moves you one step closer toward financial freedom 🙂