I love creating better efficiencies. If there is a way to have technology better assist my everyday life, I’m all for it! Automation frees up time to do more of the things you like or gives you time to help grow your business. In short, time is money and automation helps make you money!
Most areas of your budget can be fully automated and I’ll show you exactly how to do it.
So let’s get started. Here’s how to automate each area of your budget…
1) Automate Your Utilities
When it comes to electric, gas, water, trash and recycling (and even your cable and internet), the company generally offers a way to set up an automatic draft from your checking account.
If not, you can generally send an automatic check for things that remain at a fixed price, but for the things that fluctuate, you may have to pay them manually. I know that’s not what you want to hear, but some companies just haven’t got with the times…yet, but they will. There is a way to force automation…
Another option for those fluctuating utility bills is to have them set up a fixed average amount each month. Living on a mount top, I can tell you that gas bills are much higher in the winter than in the summer. So I have my gas company average out my bills throughout the year. This makes budgeting easier and automatic payments easy too!
2) Automate Your Investing
This should be an easy one. The reason being that automation is often a requirement. If you invest in index funds, you know there’s generally a minimum initial investment and/or a minimum monthly investment. Regardless of which requirement there is, you can set it up to automatically draft a fixed amount out of your checking account each month.
If your company offers a retirement plan, such as a 401(k), you can set your deductions to be automatic through your employer. If an employer match is offered, you should be investing at least enough to get the match. That’s like getting 100% return on your money on day one! If they don’t offer a match, it’s up to you to decide whether you’ll have better options in your employer’s retirement plan or in your own IRA.
IRAs usually allow for more freedom in investment choices, but if your employer’s plan includes some nice low-cost index funds, you may as well keep it simple and stick with that.
I personally like the strategy of taking advantage of your employer’s 401(k) match and then investing in a Roth IRA with automatic payments from my checking account. Talk to your financial planner for a strategy that best suites you.
4) Automate Your Mortgage
Again, this is an easy one! If possible, I would recommend setting up a biweekly payment to your lender (2 payments per month). With this system, you stop the interest clock on a portion of your payment, saving a substantial amount of interest over the life of the loan. Some lenders really don’t like this (less money for them), but some have no issues at all with it. I suggest trying to do this as it shouldn’t cost you anything and likely you are paid twice a month anyway, so this would be easy to incorporate.
5) Automate Your Debt Away
It’s easy to set up payments automatically through online banking, but you have more than one option – usually you have three:
- Pay the minimum payment each month
- Pay off the balance in full each month
- Pay the minimum plus extra each month
Obviously paying your debts off in full each month is the best option. If this isn’t possible, automate your monthly payment to include an extra portion above the minimum payment.
If you automate it, you not only will save time but you won’t miss the money that was never there to spend.
The Takeaway It doesn’t matter how you automate it, it just matters that you automate it. If you have to pay a fee to automate something, like with your mortgage payment, see if you can find a better way. There’s almost always a way to do it for free.
Always look for the free option.
It may still be worth it to pay an extremely small fee, but you shouldn’t have to. Not with the technology we have available in 2015. Automation is everywhere. You have choices and options, which is great because that means it’s more difficult for companies to charge fees for automation.
So get started now. Automate as much as you can without paying extra. Free up your time, save for your future, and get out of debt without having to think about it each time you get a paycheck and prefer to go shopping or buy that one thing you really, really need want.
How much of your budget is automated? What’s something you’re going to start automating now?