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Financial Automation Required

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Ok. This is getting ridiculous. As you know, I set some goals at the beginning of the year. I was able to hit one of those goals right away, which was doubling my 401k investment and meeting the maximum employer match. Done and done. But then my paycheck was smaller, so I adjusted my withholding to get it back where I wanted it (since I got a decent refund, I’d rather take the pay home than loan it to the government). My other two goals were to pay down my student loan debt and start a college fund. FAIL!

I NEED FINANCIAL AUTOMATION!

I have a few things automated. My student loan monthly payment, my phone bill, and, before the refinance, my mortgage (I need to fill out a piece of paper a snail mail it to get back on this). And that’s all well and good. But I have yet to automatically take money OUT of my paycheck once it hits the checking account to make sure I am saving toward my goals. And I am finding that I just have been FORGETTING to transfer the money out manually, and therefore the money just sits there, or *gulp* gets spent on “Misc”. UGH!

Now, as someone who’s a bit obsessed with following every dollar, it’s a tough spot to be in when my money that should have gone somewhere, doesn’t end of there, and I’m pretty bummed about it. But then I realized I can easily solve this issue with financial automation. No more “in the moment” choices eating up extra cash, I can just remove the money from the equation, and the decision is made for us!

How Does It Work?

Luckily, it’s SUPER simple to do, and every bank should have an easy tool online to help you sign up for it. For me, I get paid every two weeks, so I would set a recurring transfer from my checking to my savings account to happen the day AFTER I get paid (I do this because I don’t want the money to be withdrawn before the money is deposited). Then the money is automatically saved every paycheck, and you will ALWAYS hit your savings goals.

Easy peasy sneezy!
Easy peasy sneezy!

I’m going to start this week, and set a recurring transfer of $100 every two weeks. Since our monthly savings buckets add up to $200 per month, they will always be saved for automatically, so whenever one of those expenses come up, the money is there, and I didn’t even have to think about it! It’s truly hands-off budgeting at it’s finest!

BOOM!
BOOM!

Since we are on a TIGHT budget and don’t have much margin, I am (unfortunately) going to have to put the aggressive debt payoff on hold, and can only send money toward it if we get some extra income (working on that part). And I am still researching the best place to lock our college fund money away, and once I have that squared away, I can start throwing a few dollars at it, but not as much as I would have hoped.

Are YOU automated?

I know I’m late to the party. Like, extremely late. Like, the balloons are all deflated and even the clean-up staff has gone home. But hey, at least I started! And now I can enjoy the bliss of financial automation to help me reach my savings goals. I hope to leverage automation much more in the future when my margin increases, and I can start directing the money automatically into more pre and post-tax investments and savings accounts for bigger ticket items. It’s an awesome thing, and can really help protect against financial temptations and “budget creep.”

So, are YOU automated? How do you have it set up? Do you find that it saves time and the headache of moving money around? Tell me your stories of riches and fame that came from automation!

Jacob Wade

Jacob Wade

Jacob Wade has been a nationally-recognized personal finance expert for the past decade. He has written professionally for The Balance, The Spruce, LendingTree, Investing Answers, and other widely-followed sites.ย 
Heโ€™s also been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance.

In 2018, Jacob quit his job and his family decided to sell everything (including their home) to take off on an adventure. They traveled the country in an RV for nearly 3 years, visiting over 38 states, 20+ national parks and eventually settling in the sunshine state!

32 thoughts on “Financial Automation Required”

  1. Haha YES we automate everything we can! All our bill pay is automated (including mailing our rent check to our property manager), our tithe, and our savings goals. We are paid on the 25th and our budget runs the 1st to the last day of the month, so we have between $700 and $800 transferred out on the 5th for our targeted savings. Roth IRA transfers happen 4 times per month on a set schedule. I still like doing manual transfers for when we spend out of our targeted savings accounts, but that’s transferring back into our checking. If I had to do all our savings manually I’m not sure it would always get done on the schedule we want. I don’t really see any downsides to automation as long as you check that the transfers were in the correct amounts.

    Reply
    • Nice work! I’m excited, as our first automatic transfer is tomorrow. I like the idea of investing 4 times a month, that’s truly dollar-cost-averaging! Mine 401k comes out every check, but don’t have the cash for the Roth just yet.

      Reply
    • I think it’s whatever works best for your habits. For me, I know I need $200 a month for out savings accounts, so automation guarantees the money is there, instead of relying on me doing it. With my crazy schedule as of late, I’ve been dropping the ball on some things, and savings transfers was one of them. NO LONGER!

      Reply
  2. We have virtually everything automated. I think the only check we actually write is to church. If it’s not automated, then it’s set up through bill pay at our bank. It saves a ton of time and we don’t have to remember to pay something each month.

    Reply
    • I wish I would get paid once a month! I used to get paid bi-monthly (1st and 15th) and that was AWESOME!. every two weeks sucks, but since we’re a month ahead, doesn’t bother me too much ๐Ÿ™‚

      Reply
  3. Automation is key. I automate pretty much everything, except for my mortgage payment. I like to have the play with that one since it is the biggest. I pay myself each and every month without even thinking about it. It is the only way to go.

    Reply
  4. I auto transfer to two saving accounts. One savings account is for my insurance auto and house so when the bill comes I have enough saved. The other savings account is my emergency fund.

    I get paid every Monday so every Wednesday the auto transfers occur.

    I don’t have any bills scheduled for auto pay though. I think I am still scared from being broke ;-( and I want to may bills when I am sure the money is there.

    Reply
  5. I published my comment before I finished my thought.

    Regarding the 529, I am of the persuasion that if there is still outstanding consumer debt, college savings must wait until that is outta here. It looks like you are attacking your student loan hard and that is fantastic. And I can also understand why you want to avoid that with your son.

    You could map out some financial scenarios, looking at potential 529 balances with a delayed start date (but higher contribution later), vs. what you’re facing paying in interest by the slower loan pay-off.

    Seeing those numbers may make it look like a wash. Or it could make it look like there’s a clear winner one way. One thing’s for certain — the debt has a set interest rate, and a set bill.

    Your son could get a full-ride scholarship anyway ๐Ÿ™‚

    Reply
    • Good call Kacie! I’ll definitely run those numbers. Thanks! ๐Ÿ™‚

      I really want the loans gone like ASAP!! And even though he’s a genius, I still want to put some money away just in case ๐Ÿ™‚

      Reply
  6. I love automatic bill payment. We get direct deposit from work, and our 401(k), Roth IRA, insurance, and taxes are of course automatically paid before the wages hit our checking account.

    Our mortgage, utilities, and cell phone bills are all auto pay. Even our credit cards are on auto pay, but only because we keep a very regular eye on them online.

    Like John S @ Frugal Rules above, practically the only check we cut is to the church. We’ve talked about getting that set up automatically too – you can just have your bank automatically send a check every month. It’s fantastic. Although it means I never have cash.

    We also have everything set up for e-billing. Instead of our mail being only bills and spam, now all of our mail is just spam!

    Reply
  7. We definitely have the mortgage automated. Wouldn’t want to miss that! I also have money going into my RRSP and TFSA accounts automated, since the RRSP is for retirement and the TFSA is for emergencies. But for paying bills, for some weird reason, I actually like transferring the money over. It satisfies me knowing the bills are getting paid on time (and saddens me a bit because my bank account decreases, but only temporarily). For my “fun” fund, which is a high interest savings account, I transfer my money over from time to time.

    Reply
    • I used to like to pay bills, but now that everything’s pretty stable, automation will just save me some time. I still watch all transactions like a hawk, because I’m a nerd like that ๐Ÿ˜‰

      Reply
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