Automating Your Finances

Although you may be dealing with a hectic schedule, it is still important that you stay on track of your finances. If you let them slip through the cracks, you could be facing late fees and worse, a damaged credit score. However, when you automate your finances, it is easier for you to stay on top and maintain control of your money.

Even though personal finance can be simple, it is not always easy. After all, each day advertisers and marketers are coming at you with new products and hard to resist sales pitches to get you to spend your money. After all, you earned your money, so you deserve to spend it right? However, this type of thinking leads to you not having enough money left over to cover your bills. That is why automating your finances makes sense.

It only takes a few hours to set up a money management system that will automate your finances so you can get on with other important activities in your life. Below are some ways to do this.

Simplifying Your Financial Life

Set a process up to pay your bills automatically, deposit money into savings, and leave you with a little left over for entertainment and other life pleasantries.

When you automate your finances, gone are the days where you make weekly trips to the bank or credit union only to stand in lines until it is your turn to make your transaction. Everything can be done digitally, which makes it easier than ever to manage all your banking.

Not only does a shift to digital mean you no longer have to make trips to your bank or credit union, but it also makes your bill payments more secure since you are not relying on the mail to send out checks. Managing your finances becomes more convenient as it only takes a few clicks to transfer money or to set up periodic transfers. You will also have an automated bill paying system in place where you no longer have to think about whether you have enough to pay your bills. Also, with today's smartphone apps, you can even manage your finances through the convenience of your mobile phone or tablet.

Direct Deposit

Setting up direct deposit is as simple as having your employer deposit the amount of your paycheck directly into your checking account. Most direct deposit services will also allow you to break your paycheck up into multiple deposits that you can direct toward different accounts.

Automatic Payroll Deductions

Automatic payroll deductions work since you will be paying yourself first. You will be depositing a certain percent of your payroll check into your checking, savings, 401K, and other accounts automatically, so you will not be tempted to spend that money later on. You will not be saving whatever you have left over. Instead, you will be spending what's left over after you save.

Here’s a good system that can simplify your financial life. Compile a list of all your accounts such as:

  • Checking
  • Savings
  • 401K
  • Credit Cards
  • IRA
  • Student loans
  • Utilities
  • Cell Phone
  • Car Payments
  • Other bills

Gather up the URLs for their website addresses and your login information all in one place.

Next, you will go online and log in to each of these accounts and link each one together. It may take several days for the accounts to verify these links. Steps include:

  • Link your 401K account to your paycheck.
  • Link your savings account to your checking account.
  • Link your IRA (if you have one) to your checking account.
  • Link your bills to your credit card or checking account.
  • Link your credit card accounts to your checking account.

If you have questions or need assistance getting through this process, your bank or credit union representatives are usually more than willing and available to lend a hand.

Once you link all your accounts, you should be able to automate your payments and transfers to distribute your money between all of your different checking, savings, investment, and creditors.

Automated Savings

By automating your savings, you will no longer have to remember to "feed" your savings account. You will have an automatic transfer system from your checking account into your savings account. The amount you want to transfer each pay period from your checking to your savings account is up to you. Apply this to linked investments such as mutual funds or stock broker accounts as well. Doing this ensures a foolproof way to pay yourself.

Automated Bill Pay

Your online banking system will let you set up automatic monthly bill payments for your mortgage, rent, credit card payments, or utilities by choosing a monthly withdrawal date. Some lenders may off you incentives such as discounts or lower rates if you set up automated payment with them. Automated bill pay also helps you to keep your financial records organized since you can easily track them in your online account.

All it takes is a little strategic thinking and a few hours to get your automated financial system up and running. When you automate your finances, you are taking control of your financial security for today and the future. Once you set everything up, it will surprise you how simple managing your money can be.

Information presented in the Northwest Financial Wellness Center is provided for educational purposes only and is not related to actual Northwest products or services. Northwest makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Northwest recommends you consult a professional for any specific guidance you are seeking.