Automate Your Money

Summary: Automating your money is one tip that can make you hundreds of thousands in just a few minutes. (Tweet This)

When it comes to money, one of the best things I've ever done was to automate everything. It's great for me, but as personal finance expert Phil Taylor points out: automating finances isn't for everyone.

About a dozen years ago, I had an epiphany... if I have to keep shifting money here and there something is going to fall through the cracks. When that happens, I'm going to lose money or incur a fee. I hate fees.

If necessity is the mother of invention, then laziness is the father.

Here's a guide of the processes that I automate:

automate your money

Let a robot Automate your Money

Credit Card Payments

It has been years since I manually sent a payment to a credit card company. I let them claw into my bank account and take what they need so that I never miss a payment and never trigger fees. This way, I reap the sweet, sweet rewards of 1-5% cash back.

The downside with this is that many people don't like to give credit cards access to grab money out of their accounts. I totally understand that. I gave it a try to see how it goes and years later, it has been perfect in about a thousand transactions across many cards now. It certainly beats my error rate as a human.

An awesome side effect of this system is that I know I need to keep a good chunk of money in my bank account just to be safe. I'm going to err on the side of caution, so keeping my bank account "safe" reinforces my frugal behavior.

Automate Payments to Retirement Accounts

As we covered in The Guide to Financial Freedom, retirement accounts are one of the best tools available to you.

You may have heard the saying "Pay yourself first." That is exactly what this is. It's paying "future me." I've learned over the years that "future me" becomes "present me" quickly. Let me tell you that "present me" is enjoying the contributions from "past me."

Confused enough? Good let's move on.

Automate Payments to a Savings Account

Just like automating payments to a retirement account, you should automate some payments to a savings account. Some people use this as my emergency fund. When that's got a safe amount of money in it (generally 6 months of living expenses), it can be redirected towards and opportunity fund. It's great to have a good opportunity fund in place, use it well and it can grow your net worth quite a bit.

The important thing is to move this money out of sight and out of mind. I'm testing out a new service called Digit that I love. They automate this process of squirreling money away from your savings account. They do it in small chunks that you probably won't notice, but it adds up over time.

Consolidate Your Banking

When I was 20, I signed up with every bank that offered a free T-shirt and a single with a B-side song of Blink 182. All the banks were at College Fest. I must have picked up dozens of credit cards for free stuff.

What I didn't realize is that I'd now have all these zombie accounts out there... and they are all looking for delicious brains.

In chasing the best rate and the best perk, my financial information was everywhere. It took some time, but after seeing how my wife had consolidated most everything USAA, I saw the light. It is so much easier to have everything in one place.

Set Your Financial Calendar

I'm going to give you some work to do right now while you read this. Don't worry, it'll only take a couple of minutes. Open up your calendar software.

I'll wait.

Got it open? Good.

Now flip ahead one month from today and put an entry to check your credit report. Make it a recurring entry and set it to go every 4 months. You can get a free credit report from Annual Credit Report every year. So why every 4 months? There are three credit bureaus you can get them from. Get a different one every four months.

If one of the credit bureaus is off it may take you a little time to notice it this way. However, this way you get to view what is 99% likely to be an accurate report. It is better to catch identity theft after 3 months than it is after 9 months.

Next, flip it ahead another month and make another entry. This time we are making an appointment for checking our net worth. Depending on what stage in life you are, this one can recur 1, 2, 3, 4, or 6 months. I personally like to calculate it every 3 months.

It may seem very complicated and tedious, but it isn't. If you consolidate your banking and use a spreadsheet, it can be knocked out in under a half-hour. The first couple of times will take longer, but as you get in a flow it will be much, much easier.

There's one final calendar entry to make. This one is going to be every 6 months. Every 6 months, I want you to do an audit of necessary expenses and subscriptions in your life. Many of these things like your mortgage and car payments won't change. However, you may be able to get a discount on cable service or a cheaper cell phone plan. You may find that you don't use that Netflix very often. Maybe you subscribed to HBO to watch True Blood and now that the series is over are left paying for nothing?

Conclusion and Further Reading

I can't begin to estimate how much automating my money has done for me. When I look into my retirement and see 6 figures starting with a crooked number, I can't help but think, "Would I have really saved this otherwise?" I know the answer is no.

So I guess I can begin to estimate how important it was for me. It is worth hundreds of thousands of dollars. With the power of compound interest, it could be millions down the line.

That thought brings us right into:

Further reading: This is an easy one... The Automatic Millionaire. Personal Finance guru David Bach has earned a 4.2 star rating with 460 reviews a great value for the current price of $8.12.

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