5 Ways to Automate Your Finances


No matter how hectic your schedule, it's important to keep your personal finances on track. Let them fall by the wayside, and you could face late fees or a damaged credit score. Automating your personal finances, however, is one easy way to simplify and maintain control of your money. (See also: Money Management in 5 Minutes a Day)

Consider these simple options for getting your finances on the right path and avoiding costly mistakes.

1. Let Your Online Purchases Pay Off Your Debt Automatically

Many of us enjoy the benefits of rewards credit cards that give us cash back or points for regular purchases. You can go one step further by enrolling in services such as Upromise and ShopperFund which enable you to automatically pay off debt from cash back earned by shopping at participating retailers. Upromise lets you earn cash back to be automatically applied toward student loan debt, while services like ShopperFund let you pay off other types of debt.

2. Enroll in Your Employer's 401(k) Plan

Saving for retirement on your own takes discipline and dedication. Fortunately, you can automate much of your retirement investing by enrolling in your employer's 401(k) plan.You choose how much of your pre-tax paycheck to contribute (such as 2%, 3%, or up to the maximum percentage allowed by your employer), and the plan automatically deducts this percentage from your check and deposits the funds into your retirement account. And if the company offers a matching program, they'll match a percentage of your contributions, helping to grow your retirement funds at a faster rate. Since 401(k) contributions are taken directly out of your paycheck, you won't miss the money.

3. Set Up Automatic Transfers to Savings and Investment Accounts

If you have trouble remembering to feed your savings account, consider scheduling automatic transfers from checking into your personal savings account. You can decide what amount or fixed percentage of each paycheck to transfer from checking into savings each pay period. The same also applies for investment accounts; many online brokerages, such as Sharebuilder also enable automatic funds transfers from checking accounts to fund regular purchases of stocks or mutual funds. It's a foolproof way to make sure you always pay yourself first.

4. Set Up Online Automatic Bill Pay

You can also automatically pay monthly bills, such as rent, mortgage, utilities, and credit card payments by selecting a monthly withdrawal date and allowing your providers to directly deduct from your checking account. Many providers offer extra benefits or discounts for auto-pay customers; student loan borrowers, for example, can often benefit from interest rate reductions. Online bill payment also helps organize your financial records, since any payments can be easily tracked in your web account.

5. Transfer Discretionary Funds to a Prepaid Debit Card

I got this idea from a friend about two years ago, and so far it's been an effortless way to manage our discretionary funds. It's basically a modern-day version of the envelope system. But instead of separate envelopes for different spending categories, we use a prepaid debit card to hold funds set aside for groceries and entertainment. That way, we don't have to use our bank debit card so much throughout the month.

Since we're committed to only spending what we deposit on the card, this method keeps our grocery and recreational budget on track. And one of the best features of some prepaid debit cards is the ability to set up automatic transfers from a bank account. Not all prepaid debit cards offer direct deposit or automatic transfers, so you'll need to research different cards.

Do you have other easy ways that you automate your finances that you'd like to share? Please share in comments!

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Guest's picture

It seems so simple but one of the biggest things I would recommend to save money is to automate payments into your savings account the first day you get paid. By taking this money out of your account psychologically you can see that you have less, which I have found makes me want to be more frugal!