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Finances in 55: Automating Your Finances

One of the ways you can streamline your finances is to automate them so that you don’t have to worry about paying bills and transferring money into your savings account. Many people enjoy having their finances on automatic, since it means fewer things to worry about. Plus, with your money automated, you can go on vacation without fear, knowing that your bills will be paid and money will continue to be moved to your savings account, without effort on your part.

The actual process of automating your finances takes significantly more than a minute. However, you can sketch out your needs, and put together a plan for automating your finances, in 55 seconds or less:

  1. Figure out which items can be automated: Your first task is to list out which of your financial needs can be automated. This can include your utilities, car payment, automatic transfers from your checking account to savings account and even regular payments to creditors. (17 seconds)
  2. Decide which accounts each item should come from: Your next step is to determine which account you want each item to come from. If you have a central checking account that serves as a hub, it makes it pretty easy; everything comes from that account. In some cases, though, you might want to get rewards points for making purchases with your credit cards. At that point, then, you need to adjust the flow of money so that your bills are automatically paid with a credit card, and then your credit card bill is paid out of the checking account. (22 seconds)
  3. Determine which days you want different items to come out of your account: When I set up automatic debit for my mortgage, health insurance premiums, and other bills, I was able to choose what day of the month I wanted the money to come out. Think about what days would work best for you, dependent on when you are paid. If you have your paycheck directly deposited [3], this can make things a little bit easier. Make sure you split up the bills so that they are staggered according to when you know you will have money in the bank. (16 seconds)

Once you have the basics figured out, you can make a plan for automating your finances. You can create a financial network map [4] that provides you with a visual of where your money is, and where you want it to go to aid you in your efforts.

Remember, though, that automating your finances isn’t a solution [5] if you have difficulty making ends meet. All those automatic withdrawals and debits can become a problem if you consistently drain your main account. Additionally, automation shouldn’t be an excuse to stop keeping track of your spending. Use personal finance software [6] or a web app to record transactions. You can program in your automatic bills so that are reflected, up to date, in your software.

For those who are already financially organized, automation can be a great help. I worry a lot less about making sure my bills are being paid, since it’s mostly automatic. I know my money is moving through my personal economy the way it should, and it’s one less thing to worry about.

(Photo: Leo Reynolds [7])