How to Automate Your Personal Finances

This article was originally published on Planner Bee.

Do you find yourself spending too much time every month on managing your finances?

It is a necessary process that can be both time-consuming and stress-inducing. The demands of paying bills, purchasing essentials, planning for retirement, and setting aside funds for unexpected expenses can make personal finance seem like a never-ending task.

Automating your financial management can save you a lot of grief, while also bringing a list of other benefits.

This comprehensive guide will walk you through the process of automating your finances. By the end of this article, you’ll have the knowledge and tools to take control of your financial life and put your money to work for you.

What does automating my finances mean?

Automating your finances is akin to a plane flying on autopilot.

Just as a pilot relies on automated systems to navigate and maintain the course of an aircraft, automating your finances involves setting up systems and tools to manage your money with precision and consistency.

This includes automating bill payments, savings contributions, investment allocations, and even aspects of budgeting and expense tracking.

So, why should you automate your finances?

The biggest advantage of automation is that it saves time. When you have the right systems in place, it frees you from the day-to-day financial tasks, enabling you to concentrate on long-term financial goals and ensuring that your financial journey stays on course.

Automation also empowers you to stick to a financial plan and take steady strides toward your monetary objectives. Whether you’re saving for an emergency fund, retirement, or a specific financial objective, automation ensures that you consistently set aside money, regardless of distractions or temptations. This disciplined approach can help you build wealth and achieve your long-term financial aspirations more effectively.

Putting your finances on autopilot simplifies your life and also enhances your financial health by reducing the chances of errors, overspending, and missed payments that can severely impact your credit score, ultimately leading to a smoother and more secure financial flight.

Which aspects of personal finance can you automate?

Rule of thumb: As long as it involves regular and predictable financial transactions or tasks, chances are, you can automate it.

This list is not meant to be exhaustive, but here are some examples of what you can automate:

1. Utilities
2. Rent or mortgage
3. Insurance premiums
4. Subscription services
5. Credit card payments
6. Investments
7. Debt repayment
8. Charitable donations

Automating your bill payments

Bills, an essential component of managing your financial responsibilities, often benefit from automation.

Recurring monthly payables often include rent or mortgage, utilities, credit card payments, subscription packages and insurance premiums. Just automating your bill payments alone can help to greatly improve your daily quality of life.

How do I automate my bills?

First, you can start off with making a list of what you are paying for every month and who you are making the payments to. Check in with the specific company or institution on whether they offer recurring charges. This process could take some time if you are currently paying your bills manually, but trust that it will pay off in the long run.

As an added bonus, doing this step properly can help you identify and assess any unused or underutilised packages you’re currently subscribed to. It can also serve as a reminder to cancel any free trials or memberships that you may have forgotten about.

Automatic budgeting

Automate your budget by scheduling regular transfers between accounts. Doing so can ease the burden of having to manually portion your income. In addition, you will be providing yourself with a hands off approach to tracking the growth of your savings account.

50/30/20 Rule: Split your income into three categories of spending: 50% on needs, 30% on wants, 20% on savings.

How do I automate my budget?

To effectively implement this strategy, you’ll first need at least two accounts: a primary salary account and a high-yield savings account. Depending on your financial goals and preferences, you might consider designating one for your emergency fund and another separate account for your retirement savings.

Each month, when your paycheck is deposited into your salaried account, allocate a predetermined percentage or amount to be automatically transferred to your savings account.

After ensuring that your bills are paid through automatic deductions, the remaining balance in your salaried account becomes your allocated budget for monthly spending.

Read more: Have a Budget? How To Throw Great Parties Without Breaking the Bank

Automating your Investments

Once you have automated your bill payments and savings, you can start to look into automating your investments.

Automatic investments are powerful financial tools that allow you to consistently allocate a portion of your income into various investment vehicles without the need for manual intervention. What makes this strategy particularly effective is that it eliminates the temptation to “time the market” and removes emotional impulses from the investment process.

How do I automate my investment?

There is a wide range of solutions in the market currently available for automating your investments. Brokerages also offer options like regular savings plans and recurring investment plans that can be tailored to your preferences. Remarkably, some of these platforms permit you to initiate automatic investments with as little as S$1.

Nevertheless, it’s crucial to conduct thorough research, as various providers impose different fee structures and trading terms. This diligence ensures that you choose the option that best aligns with your financial goals and provides the most cost-effective and efficient solution for automating your investments.

Regularly review your setup

While setting up the automation process for your finances requires a significant upfront investment of your time and effort, it doesn’t equate to complete hands-off management.

To draw a parallel with the autopilot analogy, although it lightens the workload, it’s still essential to regularly evaluate the performance of your automated system and be prepared to make any required refinements.

Life circumstances change, whether it’s an unexpectedly high credit card bill one month leading you to adjust your payment strategy or a new subscription for Netflix to binge your next favourite Korean drama. The beauty of automation is that it simplifies the process of adapting to these changes, making it far more convenient than manual payments and saving methods.

Conclusion

Automating your personal finances is a smart and efficient way to take control of your money and make it work for you.

By putting into practice the techniques we’ve explored earlier, you can simplify your financial administration, granting you more time and mental space to concentrate on other life objectives.

Still, do keep in mind the importance of periodic check-ins to ensure the continued smooth operation of your financial systems.