5 Ways to Automate Your Finances
We all know how busy life gets Once August and September roll around. Do yourself a favor and takes these 5 financial steps now to help automate your finances for the upcoming school year.
1. Set up an automatic deposit into a savings account with a decent interest rate.
At the very least start having money automatically pulled from your checking account into a decent (greater than 1% interest) savings account. I started just by having $50 automatically transfer at the start of each month. It sounds small but pulling that money out of your checking account each month adds up in a hurry. If you are like me, I tend to spend whatever is in my checking account. It is crucial for my savings to have that money come out right away to the point where I basically never see it. I forget the fact that I am saving money first.
2. Check to see that you are getting a real interest rate on your savings account.
Four years ago I, like most people, had a savings account through my local bank. Turns out that savings account was earning a whopping .05% interest... What a waste! Currently I have a capital one 360 account (affiliate link). It's not extravagant but it earns 1% interest. That is 20x the rate of my local bank! You can find some banks out there that will offer up to 2.5% but as long as you are up over that 1% mark at least your money is doing something while it is sitting in the bank. Personally, I don't keep a large sum in a savings account. I prefer to have that amount invested, but it is nice to have a little cushion in cash available.
3. Increase your contributions to your investment accounts (403b, HSA, Roth IRA, etc.)
You should have some kind of an investment account that you contribute money to. At the start of each school year, I slightly increase the amounts I contribute to each of those accounts. I like for my increased contributions to match whatever my raise will be for the upcoming year. I have figured out the monthly allowance that I can live very comfortably on ($2,600). At the start of each school year, I will increase my 403b, HSA and Roth contributions so that my take home each month is roughly $2,600. Doing this prevents me from getting the lifestyle inflation that comes from earning more money and beefs up all of my investment accounts.
4. Automate your bill paying
Paying your monthly bills can be time consuming, and if you're like me, another thing that you can potentially forget. Go through all of your accounts - Internet, Electric, Gas, Trash, Mortgage, Car Payment, Student Loan, etc. and set all of those bills to auto-pay. It might be nerve-wracking at first but in the long term it saves you a lot of time and mental energy to automate all of those bills. Typically, if you go under account settings there will be an option to auto-pay. For me it has freed up time and has reduced the amount of stress in my finances. Knowing that my bill will automatically be withdrawn from my checking account is one less thing I have to worry about during the school year.
5. Establish a preferred way to track your spending
If you aren't tracking your spending and your net worth, then you aren't paying attention to the number 1 factor in your journey to your financial freedom. There are a lot of services out there. A lot of great ones are free. I personally use Mint and Personal Capital to track my spending and my net worth. I feel like those do a nice job of tracking all my finances. I like having Mint to track my day to day expenses and I primarily use their monthly spending categories feature. I use Personal Capital to track my net worth. I feel that it does the best job tracking all of my accounts collectively and giving me an accurate look at what my net worth is and is the site that I reference when I set my net worth goals for the year.
After all of that is said and done, I still like to use a spread sheet that helps track spending and net worth over time.
Keep Stackin!
