Automating a few financial tasks can save you time, brain space, and money.
Step 1: auto-pay yourself. Paying yourself first means you're making saving a priority — whether it’s for your emergency fund or another goal — before your bills eat away at your bank account balance. You can ask your employer to direct-deposit part of your paycheck into a savings account. Or you can set up an automatic transfer to move money from your checking account to savings. Making it automatic vs. a task you have to manually do every month means you won't have a chance to "accidentally" spend the money you meant to save on something else. And chances are, you won't even miss it.
Lots of things. Here are a few more you can put on autopilot.
Investing. You can set up automatic transfers to your 401(k), IRA, and/or other investment account. Welcome to dollar-cost averaging: what the pros call investing a set amount of money at regular intervals. So when stock prices are up, you’ll be able to buy fewer shares. When prices go down, you can afford to buy more shares. Over time, this could lower your average price-per-share vs. what you might’ve paid if you invested a lump sum. PS: to make investing truly set-it-and-forget-it, you can sign up for a robo advisor service like Betterment, Wealthfront, and Acorns. These platforms automatically rebalance your portfolio over time to match your risk tolerance and goals.
Paying bills, bills, bills. As in, your phone bill, car payment, student loan, and rent or mortgage...most of your regular payments can be put on autopilot, either directly through the service provider or your bank. This move could even score you a discount. For example: some student loan servicers reduce your interest if you enroll in autopay. At the very least, you can avoid late fees.
Tracking your spending. Apps like Mint, Wally, and YNAB let you hook up your bank and credit card accounts and automatically track every cent. That can make it easier for you to build, tweak, and stick to your budget.
Shopping. For regular household purchases, monthly subscription services (think: Amazon’s Subscribe & Save, Happy Little Camper for diapers, and Reel Paper for TP) could come with discounts. And help you avoid last-minute trips to the nearest store, where you may pay more. Make sure to compare costs before committing. And cancel when you no longer need it. Other automated shopping help: browser extensions like Honey automatically search for and apply coupons for your online shopping.
Fraud protection. Sad fact: data breaches and identity theft aren't uncommon. Looking at your bank accounts less often could make it easier for signs of fraud to slip through the cracks. The good news is that most banks let you set up account alerts for free. Get a text any time a suspicious charge goes through or your balance falls below a certain threshold, so you can investigate and notify your bank right away.
Insufficient funds fees are real. But part of living the autopay life is never seeing them for yourself. Make sure your linked bank accounts always have enough to cover your automated expenses.
Also remember that “set it and forget it” doesn’t mean forever. Check in periodically to track your progress, increase contributions, and make any other necessary adjustments.
Automating certain money moves can mean saving more and stressing less. And cruise-controlling all the way to hitting your money goals. Just watch out for speed bumps, like insufficient funds or auto-paying for unnecessary costs.
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Updated on Dec. 8 to add new tips and information from 2021.
Skimm'd by: Liz Knueven Ivana Pino, Stacy Rapacon, and Elyse Steinhaus