Managing your personal finance can require a lot of time and energy. But there are plenty of tools, apps and practices that can check repetitive tasks like paying bills and saving money off your to-do list.
Ideally, you want to build a system that lets you spend less than an hour a week monitoring your money. Here are some tips to get started.
Managing personal finances can feel like a full-time job, especially if you live paycheck to paycheck. Automation can help with some of the most stressful and time-consuming tasks, such as paying bills, moving money between accounts, and contributing to savings and financial goals.
Putting your personal finance on autopilot requires creating the right system. This includes opening the most beneficial accounts (like a cash cushion in your checking account and credit cards that align with your largest spending categories). It also involves setting financial goals, including investing with an AI-powered investment robo-advisor.
Then, set up automatic transfers to pay your bills on time and avoid late fees. Finally, automate your savings so that you always have a cushion for emergencies and the future. To keep your finances on track, it’s helpful to review your money and automated transactions regularly. For many, that means a few times a week. For others, it might be every other week.
A bank’s bill pay service can make it easy for consumers to manage all of their recurring bills in one place and automate them as well. It also allows them to easily track due dates, which is important to avoid any surprises that might result from a mismatch between automatic bill payments and their paychecks.
Another key feature of a good bill pay platform is account alerts. Most banks will let users set up text, email and app alerts to notify them if their checking balance dips below a certain amount or when an upcoming bill payment is scheduled to hit their account.
Financial automation can help people spend less time paying bills, moving money to investments or calling their bank about potential fraud, giving them more time to do the things they love. But it’s not a magic bullet. It takes a little effort to set up budgeting, savings and debt repayment automation, but it’s worth the investment in time to streamline your finances.
While automation can be a boon in many areas, it should not replace personal involvement. There are some money matters that require real, human attention and effort: Setting and adjusting goals, fighting temptation, staying mindful of the long-term, deciding what type of financial life you want to live.
Having enough cash to cover emergencies, invest regularly, pay down debts and meet other savings and investment targets is one of them. A reverse budget can help you do that.
Once you’ve built that cushion, set up automated infusions into retirement, general investing and credit cards accounts to give your finances an extra boost. On the days your paycheck hits, make it a point to route money directly into those accounts, rather than into your checking account. This strategy – which involves paying yourself first – is psychologically sound and really works. It reduces the amount of money you’re tempted to spend. It also helps ensure you’re consistently putting your best foot forward with your long-term goals.
It’s a money advice trope that’s become cliche for good reason: “Pay yourself first.” Automating savings can make this goal easier to meet.
For example, you can set up automatic transfers from your checking account to an emergency savings account or investment funds. This ensures your finances can withstand an unexpected expense, such as a car repair or medical bill.
You can also use an automated system to funnel a portion of each paycheck into a retirement account, like a 401(k), solo 401(k), or SEP IRA. You’ll likely have to review the automatic transfer schedule regularly, as your expenses and income change over time.
However, don’t let financial automation become a crutch. Your personal finance needs to involve some human attention, including setting and adjusting your money goals and figuring out how to get there. You can even spend less than an hour a week managing your finances. This will still leave plenty of time to spend on the things you love.