You are wasting time and money if you are paying your bills manually.
Yep. I just went there.
You are also lessening your chances of saving consistently by doing that manually.
Not saving consistently means when you have an emergency, retire, lose your job, etc, there is nothing there. And that sucks.
To save you time, money, and heartache, there is a little tool called automation. Automation is taking all your bills, income, retirement, savings, or any other expenses you may have and putting it on an automatic withdraw. It’s a great tool to use, and best of all it’s free. It may be a little bit of an initial time investment, but it will pay off 1,000 times over when you’re done.
I’ll explain what automation is, why it’s good, then walk you through step by step how to automate your personal finances. Now grab a snack, and get ready to roll!
Not sure what Automation is?
You set up an automatic withdraw, now every time that bill is due your money will automatically be sent to the bill provider. For example, if you set up an automatic payment (or withdraw) with Verizon for your phone bill, each month the amount you owe will be taken from your account and sent to Verizon. You don’t have to do anything for this to happen besides the initial setup.
Which means you save a ton of time month to month.
Benefits of Automation
You won’t have to remember when things are due (which is super helpful if you are as scatterbrained as me).
Saves you time month to month because you only have to set everything up once, then it happens automatically.
It saves you money because you won’t have to worry about late fees (this is assuming you have enough in your bank account to pay the bill, which you always will if you use my budgeting system).
You will always be saving and investing in your future, automatically without making a conscious effort.
You won’t get so burned out with your personal finances because you won’t have to deal with them as much.
You won’t have to use so much willpower with your finances. See willpower is super important when it comes to money, because the more we have to use it the more likely we are to “crack” or become depressed about money (or both).
How to Automate in 3 easy steps.
We’re going to walk through this step by step so if you are confused or don’t know where to start, don’t worry. I’ve also broken it down into different categories, so if you’ve already got one category down feel free to skip on down to the next one. 🙂
Before we start, please fill out this Cash Flow Statement if you haven’t already so you know what all your income and expenses are. It will make this process much easier.
Step 1: How to Automate Income
If your paycheck is not sent directly to your bank account when you get paid, this is for you.
For all my side hustlers or business owners (hey there!), even with variable income you can usually get the money sent straight to your bank. A lot of sites (like Etsy for example), will have an automatic deposit feature built in, all you have to do is set it up.
However, DO NOT give out personal information like your bank routing number to any that are not established and mainstream companies (Amazon, Ebay, Etsy, etc). I don’t want your bank account getting hacked! If you don’t know whether to trust the site or not, have the money sent to Paypal or a trustworthy third party, and then have the third party send it to your bank.
Step 2: How to Automate Expenses
Now to the second part of the Cash Flow Statement. Time to automate expenses.
Most every expense can be automated. Looking at the Cash Flow statement, these categories can most likely be automated: auto insurance, auto payments, business services, education, entertainment, health & fitness, health insurance, home/renters insurance, internet, life insurance, loans, phone, savings, and utilities. Some of the other categories like home mortgage/rent or credit cards may also be applicable, but it depends on the company or landlord. Check in with them to see if they offer this.
Automating bills: You can usually do this directly from the website of the company or provider. If you log into your account, there is usually an option in there for automatic bill pay (you can also try calling them if you can’t find it). This works for both fixed, and variable categories in the Cash Flow Statement.
If this doesn’t work, a lot of banks will let you set up bill pay directly through them. Log into your bank and see if they have this feature. All you’ll have to do is put the amount you want withdrawn, what company you want to send it to, and what day you want it withdrawn (do a few days before the bill is due so it has time to go through and it’s not late). Make sure it will recur every month, and that you didn’t just do a one time payment. Once set up, the bank will automatically send a designated amount to the company every month.
Keep in mind this method only works for the “fixed” category in expenses. Variable bills, like electricity or gas will not work with this method because they change every month. When you set up autopay through the bank, you are telling them to send the same amount every time, so it won’t automatically correspond with variable amounts due like the first method does.
Automating everyday things & other variable expenses: Sometimes it’s hard to know how much money to spend on things like clothes, gas, or groceries. It makes it much easier when you know how much is there available without having to think about it. That’s why I’ve created a super easy and intuitive system to keep track of things like this. No math involved.
Step 3: How to Automate Savings & Goals
This category is one that often gets overlooked. However, with your savings and goals automated, you are more likely to have a retirement, pay off those credit cards, or go on that dream vacation!
It is definitely worth putting this money away, even if you don’t feel like you have anything to save make it a priority!
The great thing about this is you’ll be saving money without even realizing it! It won’t even feel like a burden, because it will be like the money isn’t even there until you really need it. 🙂
Automating an emergency fund: If you have not already, open a separate savings account that is only for your emergency fund (and nothing else!). I would suggest finding an account that limits your withdraws so it is less tempting to take the money out. Now, go on your bank and find the bill pay or automatic withdraw section, and automatically send money to this account every month!
Automating debt payoff: Similar to step 2 How to Automate Expenses, we can log into a companies website and set up automatic payments for debt payoff. However, instead of just putting the minimum payment, you can increase the amount so you will pay it off sooner. Like that section, if the provider of your credit card or student loan debt does not have an autopay feature, you can send it through your bank.
Automating goals: Want to buy a new set of furniture or go on a dream vacation? Instead of just financing it, which (no matter what the sales dude tells you) is a huge rip off, you can save up for it by automating monthly “payments” then pay for it in full. This will make you feel much less guilty and be happier about the purchase, believe me.
However, instead of paying the furniture company or travel agency every month, you are just going to be paying yourself! Every month you are going to put in your spending plan a certain amount into an envelope for that purchase. If you have extra money at the end of the month, you can throw it in there too. Before you know it, you’ll be cruising in the Bahamas!
Automating a retirement fund: Some employers will automatically put some of your paycheck into a retirement account. If not, you can DIY it by following the Automating Bills section in step 2 of this post. You’ll thank me later!
That’s All Folks!
Yay! You did it! Now you can sit back, and enjoy the fruits of your labors.
What was the most helpful part of this post for you? Do you feel like you can breathe now that your finances are automated? If you have any questions be sure to comment below, or shoot me an email!
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