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Day 8: Automate Everything

  • November 8, 2018
  • By: Greenpath Financial Wellness

Automation is a great way to make life easier.  You will invest time up front setting up your system and then the system will work for you.  It’s easy to automate everything from savings, to spending, and shopping.

Wondering why you should automate your finances? You may start the week with good intentions. You’re not eating out as much, you’re packing your lunch.  You are going to have the perfect week and then life happens.  You forgot your lunch, you didn’t have time to go to the grocery store or something else got in the way. It’s ok, we have all had experiences like this.

Automation sets us up for success.  Additionally, automation saves us time and stress.  Bills will be paid on time, contributions will be made to your savings and retirement and you won’t have to think about it.

If you want life to be easier, let’s begin the process. Start by dividing your paycheck into 4 categories and having funds directly deposited accordingly.

Category 1: Employee Sponsored Accounts

Does your employer match your retirement contribution?  If so take advantage of the free money you’ve been offered. What additional investment options does your employer offer?  Talk with your Human Resources Department to learn more.

Once you’ve determined how much to invest and where, set it up to come directly out of your paycheck.

Category 2: Investments

Picture yourself in the future.  Often times, it’s easy to avoid contributing to your retirement because you’d rather have money now. If you choose this route how does that impact your future self?  Start investing today.

Talk with a retirement planner to better understand your options.
Curious about contribution limits.

Category 3: Savings

According to Bankrate.com 57% of Americans have less than $1,000 in savings!

Create separate savings accounts for emergencies, short term goals, long term goals, purchases, gifts, etc.

Pay yourself first. Maybe it’s 10%, maybe it’s $10 I don’t care what it is I want you to automate your savings.

Log into your HR portal and create a direct deposit for your next payday.  Take it a step further and set up savings accounts for your children.  If they start saving now, they’ll be able to retire sooner.

Bonus Tip: Have the money go into an account you do not have easy access to.  Research shows you are less likely to spend money if you don’t have access to the funds.

Category 4: Spending

Add up all of your fixed monthly expenses.  Take the total and divide it by the number of paychecks you have coming into your household each month.

Schedule direct deposit for that amount to go into your checking account every payday.

Once you’ve set up your direct deposit set up those fixed expenses in bill pay.  Bill pay is a great way for you to make sure expenses are paid on time.  It’s a way to paycheck plan.

At GreenPath we have a service called EarnUp that will create a bill pay system for you.  Your financial institution likely has a bill pay system.  My credit union offers this and  I love this method of paying bills.  There’s less stress, less worry about anything being late, and more control over what you have each month. An alternative approach is to create automatic billing for every account that you have.

Create a second account for your spending.  This is where you house your money for variable expenses such as gasoline, groceries and incidentals.

Having a separate account keeps you on track with your spending and provides reassurance that you’ll always have enough money to cover your monthly expenses.  It keeps you in control of your spending.

Click here to use a infographic worksheet. This can help you start  your journey to automating  your finances.

 

Dusti Young Dusti Young has a passion and energy for spreading financial wellness. Through her role at GreenPath, she connects people to financial wellness by working with GreenPath’s partners. Dusti has been with GreenPath for nearly 13 years and has held a number of roles, including financial counselor, business analyst, and her current role, Partner Relations Specialist.