Automating Your Financial Life

Your credit card statement arrives via email.

You see a late fee charge of $20.

You are certain you paid it, but can’t recall.

And now you are forced to negotiate, call and reconcile the issue. All for $20.

Silly $20 mistake.

The above example could have been avoided, had you set up automatic payments for your credit card. Some of us do it, but others don’t because they want to execute the transaction after careful review of their statements.

Focus on more important things in your life, and automate the rest.

Automate Your Life

Trade confirmations, auto-payments, billing, notifications - the list goes on. So much in our daily life can and should be automated to avoid slips ups like the above example.

Banks are the first place to start. I have a checking and savings account. I automated a transfer to occur every month, where a couple of hundred dollars moves from the checking to the savings. And the savings is at another bank earning more interest! Link your bank accounts to each other to make this automation frictionless.

This automation makes me check my account once in a while to ensure all is going smoothly - and if I want to make any changes to my set-up. Even if my account gets below a threshold I’m not comfortable with, it sends me a notification. Again, a rule that I set up to avoid checking the account every day.

Credit Cards

Your next move? Initiate autopay for each credit card from your main checking account. Have your account pay your credit card bill in full each month on the due date or a couple of days before. You’ll never see a late payment again.

Worried about your credit card statement? Log in to your account and review the charges every week or so.

Utilities

I never miss a utility payment. I set up each to either withdraw funds from my checking or initiate a payment via credit card (gotta love those points).

Worried about them taking too much out or overdrawing your account? I have my utility companies email me a notification of the upcoming bill so I know how much will be withdrawn.

Investments

I deposited a contribution in my IRA earlier this year. But I didn’t want to make one giant fund purchase. How did I get around this?

My deposit went into a money market (settlement) fund. From there, I can purchase funds at will. To spread out my purchases in the event the overall market decreases, I set up an auto-invest schedule. Every couple of weeks, my settlement fund, which holds the cash, purchases a specific dollar amount of the mutual fund I chose.

This way, I can take advantage of the ebb and flow of the market throughout the year, instead of one large purchase in early January. And I don’t need to remind myself to make the purchases each week or allow my emotions to get in the way of my investments. Some call this “Dollar Cost Averaging.” I call it, “Making My Life Easy.”

My investment firm, Vanguard, emails me the transactions when they take place, and my Gmail account filters those emails into a separate folder where I can reference them in the future if needed.

The idea behind all of this is to make your life easy. These tiny automations control the small transactions that typically fill our minds, but we often forget, misplace, or overlook them. They handle the credit card payment, the scheduled investment, and the movement of personal finances.

Automations free up your mental space to worry about more important things. They buy us time to play with our kids, focus on more creative outlets, or simply go for a walk outside and breathe fresh air.

They also help avoid that $20 late fee.

Save On,

Chris