How to Automate Your Finances to Simplify Your Life

Most of us don’t enjoy organizing our finances and tracking expenses, but thanks to technology, with a little work up front, you can automate several key areas of your financial life. Automation ensures no payments or investment contributions are missed, frees up a significant amount of time and allows you to achieve your financial goals by being consistent. Here are several ways to get started:

Download a Budgeting App

A budget is the key to a solid financial foundation, but you don’t have to track your income and expenses by hand. There are numerous free or low-cost budgeting applications, such as Mint, YNAB and PocketGuard, that allow you to connect your bank, investment and loan accounts, establish your expense categories and track your cash flow from month to month. Establishing a budget assures you are living within your means and have additional funds each month to put toward your financial goals.

I check my budgeting app weekly to make certain there are no unauthorized charges and to properly label each transaction under the correct expense category. Each month, I analyze my budget and make adjustments as needed to my expense categories and savings goals. A few times a year, I review my spending and savings habits, set new financial goals and lay out the steps to achieve them. This takes minimal time since the app does all of the monitoring and trend analysis for me and helps keep me on track toward my financial goals.

Pay Yourself First

Your paycheck should be directly deposited into your bank account, if possible. Instead of putting your entire paycheck each month in your checking account, set up a specific percentage or dollar amount to go straight to your savings account, which prevents you from spending those dollars or having to remember to transfer the funds to your savings at a later time. After reviewing your budget, you should be able to determine the amount you can allocate toward your savings goal each month.

Once your emergency fund reaches at least 3-6 months of living expenses in a high-yield savings account, you can focus on saving for other financial goals, such as a house down payment, wedding or vacation. Determine how much you need to have saved for that specific goal and divide it by the number of months you have until you need the funds. That is your amount to automatically transfer from your paycheck into savings each month to fully fund that goal by your desired date. Some banks, such as Ally, allow you to create different goal buckets in your savings account, so you can easily track your progress toward that specific financial goal.

Autopay Bills and Loans

Setting your bills and loans up for autopayment each month removes the stress and financial penalty for missing a payment. You can automate almost all payments, including rent, utilities, credit cards, student debt, auto loans and insurance, either with your bank or directly through the bill company.

Make sure you understand your bill due dates and have enough of a cushion in your checking account to avoid overdraft fees.

If you pay your credit card off in full each month, consider putting as many payments on your reward credit card as possible. This allows you to earn points for your purchases that can be used toward travel or cash back. Certain providers may charge you a service fee, typically 3%, to put your payment on a credit card, such as many mortgage and utility companies, so do NOT put those expenses on your credit card, as the fee is not worth it. Instead, establish autopayment from your bank account to avoid the service charge.

Review Your Retirement Contributions

Once eligible, enroll in your employer’s workplace retirement plan and contribute enough to at least get the full employer match. Retirement plans are great because your contributions are directly deducted from your paycheck and invested for you, making it one less thing you have to worry about. Review that your investment election is correct for your risk tolerance and timeframe, and increase your contributions by a few percent each year until you hit the maximum allowed ($19,500 in 2021).If you are not offered a retirement plan or want to save additional funds for retirement, consider opening an IRA or Roth IRA, and set up automatic monthly contributions directly from your bank account. Don’t forget, you will need to invest those contributions, as they usually are not automatically invested like a 401(k) plan.

The steps you take today to get organized and set goals will only provide a more successful future. Automating your finances is an easy and significant way to reach your financial goals with minimal stress. Review your transactions and account statements often, especially when getting started, to ensure nothing is missed, and don’t forget to increase your investment contributions at least annually. Your financial life doesn’t have to be complicated, just consistent.

About the Author Haley Tolitsky, CFP®

Haley Tolitsky, CFP® Automate Your Finances to Simplify Your Life is a CERTIFIED FINANCIAL PLANNER™ with Cooke Capital in Wilmington, NC, providing highly personalized financial planning and investment management services. She is passionate about financial empowerment, specifically for women and the next generation, and loves the opportunity to motivate and guide others to take charge of their financial lives. Haley can be reached at htolitsky@cookecapital.com.

Securities offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA, SIPC. Advisory services offered through Allegiance Financial Group Advisory Services, LLC (AFGAS). SFA, AFGAS, and Cooke Capital, Inc. are not affiliated. Supervising office (678) 954-4000.