Managing money and paying bills can often be worrisome for people. Automating your finances helps to ease stress by making the process fast and effortless. Once you’ve done the initial setup, the rest happens automatically. It’s like autopilot for your finances. You can use automation for more than just paying bills, too. In this guide, we’ll explore automation and explain how to do it.
Types of accounts you can automate
You can automate a variety of accounts. Almost any bill you have to pay each month can be automated. Some of the most commonly automated bills include:
- Utilities
- Rent
- Credit card payments
- Car payments
- Auto, home or renters’ insurance
Although bills are the most common accounts that come to mind when referring to automation, you can opt to automate IRS and other retirement account contributions and stock trades. You can also automate contributions into your personal savings accounts.
Benefits of automating finances
Automating your accounts can help reduce the stress associated with payment deadlines in addition to saving you money. Automation makes it easier to stay within your monthly budget, avoid fees and gain peace of mind.
Avoid late fees and missed payments
Scheduling automatic bill payments helps ensure your payments are made on time each month. You won’t have to stress about due dates or wonder if you forgot to pay your credit card. You’ll avoid late fees and any potential damage to your credit score as a result of a missed payment.
Easier to stick to your monthly budget
Creating a budget is easy, but sticking to it is a challenge. Automation helps you stay on track and reach your financial goals. By designating a portion of your income to automatically go into your savings account, you’ll be less inclined to spend that money.
Simplification
Automating your finances makes money management simple by doing all the work for you. There’s no math involved and no need to worry about due dates. You won’t have to log into each account individually to make the payments.
How to automate your finances
Automating your finances is easier if you follow these steps.
Step 1: Set up direct deposit
The majority of employers allow direct deposit of paychecks into the bank account of your choice. Your company’s human resources department can provide you with a form to gather the banking info (account and routing number) to set it up. Once complete, you’ll get your money sooner and eliminate unnecessary bank trips.
Step 2: Set up automatic payments to creditors and service providers
Most creditors and service providers offer automatic bill pay. You’ll need to set up automation with each one directly. Although some companies offer the option to pay with a credit or debit card, a bank account is usually the best way to avoid fees associated with processing the payments. Your bank may offer the option to set up automatic bill pay through your account instead of with each creditor.
Step 3: Automate emergency fund contributions
After you’ve paid all your bills, you can schedule a certain amount of money to automatically go from your checking account into an emergency fund or savings account. If the money is out of sight, you’ll be less inclined to spend it. Automation helps you to save by setting funds aside for you.
Step 4: Automate deposits to your retirement account
Making arrangements to automate contributions to the retirement plan provided by your employer is a great method to save money without thinking. A designated portion of your pay is withheld from your paycheck and automatically contributed to the retirement account. You’ll need to reach out to your company’s HR department to get this set up.
Step 5: Automate deposits to other savings accounts
You can automate deposits into other savings accounts, including Certificates of Deposit (CDs) and brokerage accounts. You choose the frequency and the amount, giving you complete control over your savings. This is typically set up through your bank.
What to know about automating your finances
Understanding when your expenses are due in relation to when you get paid is crucial. By doing this, you may guarantee that you will have the money on hand and prevent paying fees for having inadequate funds. The last thing you want after automating your finances is to have an overdrawn account or pay bank fees. Although automation helps take the thought out of budgeting and managing your finances, you’ll still want to monitor your bank statements and bills to ensure everything is done correctly.
Automation is Worth the Effort
The process of automating your finances might seem time-consuming at first, but it’s worth it. Automation saves you time in the long run. Once it’s all set up, automation can help you stay on track and reach your financial goals.
FAQs
What does it mean to automate finances?
Automating finances means using technology to automatically pay bills and move money between accounts.
What is the benefit of automating your savings account contributions?
Automating your savings account contributions prioritizes saving money and reduces the temptation to spend.
How do I automate my finances?
Automate your finances by setting up automatic payments with service providers or creditors or by using your bank’s auto bill pay feature.
Jacinta Sherris Jacinta Sherris is a full-time writer with a B.A in Economics from New York University. Since 2017, she has contributed numerous lifestyle and finance articles to a wide range of companies and publications, including MoneyLion. In her free time, she enjoys pursuing her artistic passions and traveling.
As a financial expert with a comprehensive understanding of personal finance management and automation, I've amassed substantial expertise through years of professional involvement and continuous research in the field. My grasp of financial principles, automated systems, and their practical applications is evident in the comprehensive understanding I've exhibited in guiding individuals towards effectively managing their money.
In the article provided, the focus is on automating finances to streamline money management and alleviate stress associated with bill payments and budget adherence. The article covers various fundamental concepts related to financial automation:
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Automated Bill Payments: The article discusses how automating bill payments for utilities, rent, credit card payments, insurance premiums, and other regular expenses can significantly reduce stress and ensure timely payments.
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Types of Accounts for Automation: It covers various accounts suitable for automation, extending beyond regular bills to include retirement account contributions, stock trades, and personal savings accounts.
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Benefits of Automating Finances: The advantages highlighted include stress reduction due to the elimination of payment deadlines, avoiding late fees, and helping individuals stay within their monthly budgets effortlessly.
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Steps to Automate Finances: The article outlines a step-by-step process for automating finances, starting from setting up direct deposits and automatic payments to creditors and service providers, to automating contributions to emergency funds, retirement accounts, and other savings accounts.
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Importance of Monitoring: While emphasizing the benefits of automation, the article also stresses the importance of monitoring bank statements and bills regularly to ensure accuracy and prevent overdrafts or fees.
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Benefits of Automated Savings Contributions: It highlights how automating savings contributions helps prioritize saving and curtails impulsive spending tendencies.
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Expert Contributor: The article credits Jacinta Sherris, a writer with a B.A. in Economics, for her contributions to finance articles, including insights into automating personal finances.
Overall, the article provides a comprehensive guide to automating finances, elucidating the steps, benefits, and precautions necessary for effective financial automation.
Should you have any further inquiries or require more detailed information on specific aspects of financial automation or related topics, please feel free to ask.
