Have you ever forgotten to pay a monthly bill? 
Do you consistently transfer money in and out of your savings account?
Do you spend more than a few hours each month managing your money?

If you answered yes to any of the questions above, consider Automating!

If you have seen any of my goals posts, I try to make reading books and articles a priority. One of my favorite money books and one that I keep rereading is I Will Teach You To Be Rich by Ramit Sethi. “Automate as much as possible” is a big theme in Ramit’s book. The idea of automating my money sparked my interest and I applied his advice to my own life.

Automating your money means to create systems that will eliminate the possibility of missed payments, keep you on track to meet your goals, and save time so you can spend your time and mental energy on more important things.

Simple ways to Automate

Automate your monthly bills by setting them to Auto-pay

Link your checking account to your standard monthly bills (Rent/Mortgage, Electric/Water Bills, etc.). Auto-Pay will save time on paying recurring bills and ensure you never miss a payment.

If you use credit cards for your everyday spending, set your credit cards to Auto-Pay

Credit Cards offer consumer protection, so I feel confident that if there are any billing issues, they will get resolved without financial loss or wasted time. Setting your Credit Cards to Autopay (Paying the Statement balance) ensures you don’t create debt or a negative credit score mark if you forget to pay.

Have Automatic Transfers to a Savings Account

“Don’t save what is left after spending; spend what is left after saving.” – Warren Buffet

Having Automatic Transfers set up ensures you “Pay Yourself First.” Paying yourself is the most important payment you make each month. As a result, By Automating transfers into a savings account, you create a painless process that is repeatable. Automatic Transfers keep you on track to meet your savings goals.

Savings accounts can include a 401k, Roth IRA, or Cash Savings account, for example. Automatic transfers to these accounts will develop healthy financial habits and increase your Net Worth.

 Optimize Your Bank Account(s)

The average American adult has a standard checking/savings account with a local “big” bank or Credit Union. Chances are you have probably been with your bank for a long time and don’t feel the need to change or have an additional account elsewhere.

Do you know how much interest you earn from keeping your money in your bank’s savings account?

If you don’t know, you should consider looking that number up. You could be losing out on hundreds each year by having your money sit in an inefficient savings account.

Do you know how much you pay in fees each Year?

My local Credit Union now charges $1 a month to basically “keep my money safe.” They charge an additional fee for withdrawing cash from an ATM, on top of the ATM fee. They also have overdraft fees (luckily I have never incurred one).

My Credit Union Fees

After totaling my bank fees this year (Using Mint) I have paid a little over $20 in bank fees in 2016. My bank fees aren’t going to keep me up at night. However, they make me question if there are better banking options available. If a local (highly rated) Credit Union has fees I can only assume that the big banks have more.

I’m not at the point of completely closing my account at my Credit Union. Mainly because I still have a small car loan with them at a low-interest rate (1.65%) and they have excellent customer service (I am just not a fan of the increasing fees). I plan to pay off my Student and Car Loans in early 2017. Once paid off I will most likely research the best high-yield checking accounts and see what is right for me.

As of now, I still maintain my Checking account and keep about 5% of my Cash Savings in my Credit Union Savings account, but 95% of my cash savings is now sitting in a separate high-yield online savings account.

High Yield Savings Accounts

Online Savings accounts on average earn about 6-7x the interest than a regular bank savings account. Most good ones have no minimum balance requirements and no fees.

Let me know in the comments why you wouldn’t consider moving your savings to a reputable Online Savings Account.

I use Capital One 360 Savings* (sign up through my link and get $25 free!)

After researching I chose Capital One 360 savings because:

• No Fees or Minimum balance required
• .75% interest rate (APY)
• Ability to setup multiple Saving (Sub) Accounts
• Create Savings goals for each Sub-Account
• Automatic deposits from my checking account
• Spend less time on your finances.
• Excellent Customer Support
• Connects great with Mint.com

One slight downside to consider is that High Yield online Savings accounts generally take 2-3 business days to withdraw money. If you are not withdrawing often, this shouldn’t be an issue. Just be sure to plan a few days in advance if you take money out for travel or gifts.

My Experience

I started my savings accounts in June and automatically make two electronic deposits a month. I have multiple different savings accounts (Emergency, Travel, Gifts, etc.) and multiple savings goals. They say when you create separate savings categories you are less likely to touch the money as you invest in the specific savings goal. I found that to be true for myself. I do not transfer any money from my Capital One 360 savings account unless it’s for a short-term sub account like Travel or Gifts.

Example: I pulled out money from my Travel sub account to cover the expenses from my latest Colorado Trip. I also put money away twice a month for birthdays and Christmas in my “gifts” sub-account. This way I don’t exceed my budget during the holidays.

I don’t touch my other accounts such as “Emergency Fund” and target savings sub-accounts. I like to see them grow each month!

Other High Yield Savings Accounts to consider

• Ally Bank, 1% APY
• Barclays Online Savings, 1% APY

My Automated Money Process

Every dollar has a job. Before taxes, my 401k, Health Insurance, and FSA money is taken out of my salary and automatically deposited into the appropriate accounts.

Once my net salary reaches my checking account, I have automatic transfers to my Capital One 360 Savings (pay yourself first!) on the first and 15th of each month. The money is automatically divided up into my sub-accounts based on the allocation I have set up.

In addition to the Automated Savings Transfer, I pay Rent/Water on the first of the month. I pay the electricity bill and Car payment a few days later via Auto-Pay. My minimum Student Loan balance and Credit Cards set to auto-pay on the 15th each month. (I make an additional payment on my Student Loans Manually via Credit Card on the 15th as well). My cell phone is set to auto pay a few days later. All other spends (Food, Shopping, Entertainment) is paid via Credit Card which is then auto paid on the 15th each month.

Synchronize

Try to sync all your monthly bills. Syncing your bills means setup all your monthly bill due dates around the same time each month (call the company your bill account is with to change your due dates if needed).

I get paid bi-monthly so I set up the majority of my bills to auto-pay the 1st week of the month, and other bills such as Credit Cards and Student Loans after my paycheck on the 15th. Doing this ensures I have sufficient cash flow throughout the month. I leave a buffer amount ($500) in my checking account at all times to avoid any chance at overdrafts.

Question!

What ways do you automate your money?

• Author
• Recent Posts

Gary

Gary is the author behind Debt Free Climb, a blog that shows how to live intentionally, pay off their debt, build a side income, and travel the world

Gary's favorite free financial tool he’s been using since 2017 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments.


His favorite way to save automatically is Capital One Performance Saving, a bank that allows him to create multiple high-interest savings accounts and create an automatic savings plans for each account. He uses these features to meet short and long term savings goals.

His favorite way to save money on car insurance is by using Root, an app-based car insurance service. He saved $240 this year after switching from Geico to Root

Latest posts by Gary (see all)

• Debtfreeclimb 2020 Update - October 23, 2020
• DebtFreeClimb v2- Our Debt Freedom Progress Report - June 17, 2020
• Trip Report: Our Honeymoon (not on a budget) - February 7, 2020