6 Ways to Automate Your Financial Life

We all talk about how busy we are and how many hours we spend working, shuttling the kids to activities and keeping up with the household. What we don't talk about is how much time we spend on our finances. Our financial lives are often piece-mealed together because this part of our world falls to the bottom of our never-ending to-do list.

While we can't create more time in a day to deal with this important part of our lives, you can use these six hacks to automate your financial life and set you on the right track.

Hack 1: Auto Bill Pay

I am a huge proponent of this, and it all stemmed from one missed credit card bill. Years ago when my wife and I were starting our family, things naturally became hectic. We had about 10 credit cards for different items. I pride myself on being on top of my finances but, to my dismay, I missed a credit card payment. “Never again,” I said, and went on an automation binge. Today, all of my bills are set up on auto pay. Mortgage, car payment, credit card payment—you name it and it automatically gets paid on time. This is a critical step to a healthy financial life and good credit. 

Hack 2: Auto Save

We all have those short- to middle-term goals: Buy a car, buy a house or plan a big vacation. Whatever the expense, set up a high yield savings account and have money automatically sent to it from your checking account. Not only will you earn more money, you’ll have dedicated accounts for the next big purchases. It will be crystal clear when you can afford them, and knowing you are on track will feel so much better. (For related reading, see: Handling High-Yield Savings Accounts.)

Hack 3: Auto Invest

Most of us aren’t saving enough, and we have a million excuses as to why, including, “I don’t have any money left over at the end of the month.” What if you reprioritized your finances and started investing on a monthly basis first? Then whatever is left over at the end of the month is spent on discretionary items. You can start small. Get a regularly automated investment account. You can even have more than one. One can be for retirement, one for future unknowns and one for college savings. Compounding is a beautiful thing. If you automate your investing, you’ll be amazed at how quickly your small nest egg grows. 

Hack 4: Auto Increase

Most 401(k)s have a feature called “auto increase,” which allows your contributions to increase every year by 1% until you hit the maximum allowable. This great feature can make a huge difference in the long term. The majority of us won’t miss a pre-tax 1% decrease in our paycheck, but it can be hard to consciously decrease it. Instead of making this tough decision, leave it to automation.

Hack 5: Auto Rebalance

Rebalancing is generally a feature on most 401(k)s and investment accounts. This hack can really come in handy. On a regular, predetermined (typically annually or quarterly) basis, your accounts will rebalance back to your desired risk profile and allocation. This prevents one asset class from swelling and giving you a disproportionate blend of assets.

Hack 6: Auto Budget

Most of us have money leaving as quickly as it is earned. If it’s difficult to get a grip on what and where you are spending your money, that is a real problem. How can you begin to budget or even plan financially if you don’t know where your money is being spent? Simply put: You can’t. There are a lot of great tools and resources out there to help (free ones like mint.com or the paid ones like Quicken). These sites or software connect all your spending accounts and can easily categorize most of your expenditures. They run the gamut on ease of use and functionality. It's not important which one you use, just that you're using something to get an understanding of your financial outflow.

We’ve all heard of the acronym, “KISS—keep it simple stupid. When it comes to finances, a lot of it is complicated, but there are plenty of areas you can keep simple to help you be in a better financial position. Automation is one of the greatest ways, especially given the plethora of technology available. 

(For more from this author, see: 4 Factors That Determine Your Financial Success.)