You can make your life much easier by automating many tasks. Once you've spent the time up front setting up your system, that system will reward you by doing work for you. It’s easy to automate almost everything, including savings, spending and shopping.
Wondering why you should automate your finances? Automation sets us up for success by ensuring that small but necessary tasks will be done on-time, every time. Additionally, automation saves us time and reduces stress. You don't need to worry about whether your bills will be paid on time or contributions will be made to your savings and retirement, and you can use that time to focus on more important tasks.
Let's Get Started:
Start by dividing your paycheck into 3 categories: retirement savings, shorter term savings, and spending; then have the funds directly deposited accordingly.
Category 1: Retirement and Investments
Does your employer match your 401(K) retirement contribution? If so take advantage of the free money you’ve been offered. Does your employer off other investment options? Take some time to meet with your Human Resources Department to find out your options. Once you’ve determined how much to invest and where, set it up to come directly out of your paycheck.
Often times, it’s easy to avoid contributing to your retirement because it is easier to think about the here and now. Consider reaching out to a trusted financial advisor to help you get on the right path to retirement savings.
Category 2: Shorter Term Savings
Pay yourself first. Set a manageable savings goal, and have that amount automatically deposited to a savings account every pay period. For example, you could start with $10.00.
Create separate savings accounts for emergencies, short term goals, long term goals, purchases, gifts, etc. If you can, have the money go into an account you do not have easy access to, unless it’s absolutely necessary.
Category 3: 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.
Create a second account for your spending. This is where you keep 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.
Once you've taken the time to set up your automatic savings and payment plans you will find that life is much easier and simpler. You will have set yourself up for financial success.