If you want to make things just a little bit easier on yourself, you’re going to need to automate your life. This isn’t a new or original concept. Timothy Ferris, author of the Four Hour Work Week, touts it as a pretty crucial part of de-cluttering your life. One of my favorite writers, Ramit Sethi, outlines his beliefs about automating finances and your life here. He likens it to building a bullet proof system with which to make your finances and life simple.
Pretty much everyone has their own beliefs on this system or reasons why we should do it. I’ll give you a simple one: we can’t trust ourselves. We just can’t! Let’s face it, there are some people who have their lives on complete lock down. They know every penny that travels in and out of their accounts and their budget isn’t an outline, it’s a fact. However, these people are freaks. They’re anomalies! And you, me, and pretty much everyone you know, are not one of those people. We don’t have ironclad wills, we’re humans and we make mistakes. Sticking to a budget is one of the HARDEST things we will have to do. So, let’s make it easier on ourselves. Automate your financial life with just a few easy steps that should make things a little bit easier for you.
First, you’re going to need a bank account. For this to really work, you’re actually going to need TWO bank accounts. One checking account and one high yield savings account. My choice is ING Direct (now Capital One 360). While they don’t have the highest interest rate around anymore (that distinction falls to Everbank, with an interest rate of 1.01%, followed closely by CIT). In general, I go with the bank provides the best service and for me right now, that’s ING Direct. If you can find a good, online, interest bearing checking account to accompany your savings account, do it! The more interest, the better. Something that goes along with this step would be contributing to your Roth IRA or any other investment accounts.
Second, set up direct deposit with your employer. If you’re still getting your paycheck as an actual check every other week, well, I don’t even know what to think. Just stop. Seriously. What are you doing? Direct deposit! It’s easy and you don’t have to worry about it. When you set it up, you’ll set it up to automatically send 10% of each paycheck into your savings account, with the rest of the balance going into your checking. This way, you never have the temptation to spend and not save. This will remove the temptation and force you to stick to your plan!
Third, you need to do a little bit of research. Chances are every bill you pay, every loan and every little item, can be paid online. More so, a lot of institutions, particularly student loan servicers, offer a discount if you set up the account to auto debit from your checking account each month. In order to maximize the automation, as well as savings, make sure you call your Power and water companies, your credit card companies (although by now you’ve paid off your debt, right?) and your student or car loan companies, seeing if you can get a rate reduction for the auto debit. You’ll set this up to pull out of your checking account each month on the specified payment dates. If you’re worried about having the money because it won’t line up with your paycheck, talk to the company and explain that to them. Most credit cards and loan servicers have no problem changing things around to work better with your schedule. After all, they want to get paid. I know that dealing with customer service is pretty much anyone’s idea of a bad time but overall, it’s worth it. Even if it’s just peace of mind you’re acquiring, it’s better than the budget busting alternative!
Last but not least, check up every once in a while to make sure that your accounts are rolling just right. You never want to overdraft your checking, so you should always keep an eye on that. At the same time, just because your Power and Water bills are paid automatically every month doesn’t mean you should ignore how much energy you use. You still have a responsibility to your frugalness to keep a close eye on your usage and keep your bills down!
Hopefully this post helps you simply and automate your life. It’s just one more step in a simplification that can lead to a substantial release of stress in your life. Until next time!
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