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Ok. This is getting ridiculous. As you know, I set some goals at the beginning of the year. I was able to hit one of those goals right away, which was doubling my 401k investment and meeting the maximum employer match. Done and done. But then my paycheck was smaller, so I adjusted my withholding to get it back where I wanted it (since I got a decent refund, I’d rather take the pay home than loan it to the government). My other two goals were to pay down my student loan debt and start a college fund. FAIL!
I NEED FINANCIAL AUTOMATION!
I have a few things automated. My student loan monthly payment, my phone bill, and, before the refinance, my mortgage (I need to fill out a piece of paper a snail mail it to get back on this). And that’s all well and good. But I have yet to automatically take money OUT of my paycheck once it hits the checking account to make sure I am saving toward my goals. And I am finding that I just have been FORGETTING to transfer the money out manually, and therefore the money just sits there, or *gulp* gets spent on “Misc”. UGH!
Now, as someone who’s a bit obsessed with following every dollar, it’s a tough spot to be in when my money that should have gone somewhere, doesn’t end of there, and I’m pretty bummed about it. But then I realized I can easily solve this issue with financial automation. No more “in the moment” choices eating up extra cash, I can just remove the money from the equation, and the decision is made for us!
How Does It Work?
Luckily, it’s SUPER simple to do, and every bank should have an easy tool online to help you sign up for it. For me, I get paid every two weeks, so I would set a recurring transfer from my checking to my savings account to happen the day AFTER I get paid (I do this because I don’t want the money to be withdrawn before the money is deposited). Then the money is automatically saved every paycheck, and you will ALWAYS hit your savings goals.
I’m going to start this week, and set a recurring transfer of $100 every two weeks. Since our monthly savings buckets add up to $200 per month, they will always be saved for automatically, so whenever one of those expenses come up, the money is there, and I didn’t even have to think about it! It’s truly hands-off budgeting at it’s finest!
Since we are on a TIGHT budget and don’t have much margin, I am (unfortunately) going to have to put the aggressive debt payoff on hold, and can only send money toward it if we get some extra income (working on that part). And I am still researching the best place to lock our college fund money away, and once I have that squared away, I can start throwing a few dollars at it, but not as much as I would have hoped.
Are YOU automated?
I know I’m late to the party. Like, extremely late. Like, the balloons are all deflated and even the clean-up staff has gone home. But hey, at least I started! And now I can enjoy the bliss of financial automation to help me reach my savings goals. I hope to leverage automation much more in the future when my margin increases, and I can start directing the money automatically into more pre and post-tax investments and savings accounts for bigger ticket items. It’s an awesome thing, and can really help protect against financial temptations and “budget creep.”
So, are YOU automated? How do you have it set up? Do you find that it saves time and the headache of moving money around? Tell me your stories of riches and fame that came from automation!