The Complete Guide to Automating Your Finances

Taking care of your money can be exhausting. Budgeting, paying bills and making deposits take time. It all adds up. It isn’t uncommon to spend several hours each week sorting through your bills and monthly statements. And if you’re like most people, it just causes you stress and takes up time that would be better spent elsewhere.

Fortunately, the internet and a slew of technological advances have provided us with a better way. These days, you can save yourself oodles of time and stress simply by setting most of your monthly tasks on autopilot. While it may cost you a little bit of time to set up, the future hours you’ll save by automating your finances can be priceless.

How to Automate Your Finances

If you’re looking for a better way to manage your money, here are a few simple steps to help you get started.

Step 1 – Set Up Direct Deposit

The first step to putting your money on autopilot is to automate how you get paid. Over the past 20 years, direct deposit has become the norm for businesses and payroll companies. Not only is direct deposit simple to use, but it is also more efficient. Because of this, many businesses now require their employees to use direct deposit rather than receiving paper checks.

If your employer offers a direct deposit option, elect to have your paycheck directly deposited into your checking account on payday. Most of the time, you will only have to fill out direct deposit paperwork once to make the automation permanent.

Step 2 – Simplify Your Bills

Once you have chosen to have your pay deposited directly into your account, the next step is to simplify your bills. Ideally, most bills would be due around the same time of the month, which can usually be accomplished by calling each company and asking.

Even better, it helps to get all your bills around payday. For example, if you are paid on the first of the month, call and ask to have your monthly, recurring bills sent near the beginning of the month. The same goes if you are paid on the 15th.

If you get paid twice a month, you have two options. First, you can elect to have all of your bills sent to you on the first of the month. In this case, you’ll need to be aware of your cash flow throughout the month so that you don’t overspend between paychecks. The second option is to split up your bills between your paychecks. For instance, you can have half of your bills sent to you on the 1st while the second half of your bills sent to you on the 15th.

Step 3 – Pay Yourself First

In his book The Automatic Millionaire, David Bach writes about the importance of “paying yourself first” in order to grow your wealth. Bach suggests that you fund your savings vehicles before you ever touch your paycheck. With direct deposit, paying yourself first is easier than ever.

To start, you should have money deducted from your paycheck and placed into your company sponsored retirement plan, like a 401(k). Saving 10% of your earned income in a retirement account is a great starting point. This money is deducted pre-tax, which is a great advantage to your savings goals. Plus, your company will likely match a percentage of your earnings – even up to 5 percent of your salary – increasing the amount of money you save each year considerably.

Meanwhile, ask your payroll company or bank to have a portion of your earnings directly deposited into a savings account. You’ll also want to set aside some money for other expenses like entertainment, groceries, and non-recurring bills. Additionally, most online investment companies allow you to make automatic deposits into any personal retirement accounts you may have. Through your brokerage account, automate these deposits so that the withdrawal occurs the day after payday. After you set your investments and savings up on auto-draft, you can simply “forget them.”

Finally, apps like Digit analyze your spending and automatically save the small amounts you won’t notice. It may only be $10-$20 here and there, but after a while, it really adds up. Read more about it in our Digit App Review.

Also read: Best Round-Up, Automated Savings and Micro Savings Apps

Step 4 – Set Up Bills on Autopay

Now that you’re using direct deposit and you’ve simplified your bills, automatically paying them is a piece of cake. Both online and traditional banks offer online banking options, which usually includes online bill-pay. In most cases, you can set your bills on auto-pay through your own bank.. Simply log into your online banking account, enter the billing information and the day you’d like to pay it each month, and you’re done. The best part is that you only need to do it once.

Certain banks even allow you to automate your bills through your smartphone. If you are unable (or unwilling) to get all of your bills sent to you on the same day, you may consider using an app like Mint Bills. Just load all of your recurring bills into the app and let it track your due dates for you. You can also pay your bills directly through the app using either a credit card or bank account that you have connected. While it isn’t quite automatic, it is the next best thing.

Additionally, you may be able to use a credit card to automate some of your bill pay. Just like setting up online bill pay through your bank account, go to your credit card account and load the billing info. Then, select when and how much your credit card should pay toward the bill each month. While not all companies allow you to pay via credit card, this is a great way to rack up some extra rewards points if you have the opportunity.

Step 5 – Invest the Rest

You’ve paid all of your bills, budgeted for other expenses, and saved money for your retirement. So, what should you do with the money you have left? It may be time to think about investing, and Betterment is a great way to do it automatically.

Start by giving Betterment some general information about yourself including your age, time horizon, and appetite for risk. From there, Betterment will invest your money into a low-cost ETFs that suit your investment style. You can set up your account to make automatic deposits, which should take place a few days after payday to avoid issues. Betterment even checks your portfolio drift on a daily basis and will automatically rebalance it for you, either through buying/selling some of the securities that you hold or through using your cash whenever you make a deposit. While you can customize many of these options, you definitely don’t have to. If you want, you can just set it, forget it, and let Betterment take care of the rest.

M1 Finance is another great investment platform, with a slightly different approach. M1 Finance gives you the option of choosing from one of their pre-made diversified portfolios or customizing your own with ETFs or stocks of your choice. Once you’ve chosen your portfolio, you can set an investing schedule to deposit money every month, week or every other week. After that, you just let the automated intelligence keep your portfolio on track in the background. Unlike other roboadvisors, M1 Finance offers their services with absolutely no management fees or commission.

The Bottom Line

While you can automate many of your monthly financial tasks, no plan will ever be 100 percent automatic. You still need to keep an eye on where your money is going and when it is leaving your accounts in order to avoid any problems. Additionally, you’ll need to be sure that you’re spending a little bit of time each month budgeting for non-recurring expenses.

Still, automating at least some of your expenses can save you a boatload of time and trouble. And thanks to technology, automating your finances is now easier than ever.