Complete Financial System
Your financial system is almost entirely set up. You have the best credit cards, checking account, savings account, “budgeting” software, and investing accounts. With so many moving parts, you can quickly become overwhelmed with staying on top of your finances. Today, we’ll show you how to automate your entire system, so you could literally walk away for a year and come back to a higher credit score, increased savings, and a stronger value across your retirement accounts. Not recommended to walk away for a year, but it would be possible.
What You Can Automate
Everything. Other than following up on your finances every few weeks, it’s possible for you to automate every component of your financial system.
Your credit cards will accumulate expenses each month, like daily card usage or recurring charges such as utilities, insurance, and subscriptions. Using your checking account, you can change your settings to automatically transfer payment for your credit card account balance each month so you never miss payment deadlines and incur fees.
With most banks, you can also set up recurring mail order checks – this is useful when your landlords require checks instead of credit card payments. For example, rent for Hannah and me costs $2,500 each month and we’re required to pay in check form only. We set up a recurring mail order check with our checking account that mails out $2,500 to our landlord on the 28th of each month. Haven’t thought once about this regular expense since, and we’ll never incur late fees for our rent.
You can change your percent of salary contribution towards your 401(K) through your company sponsored investment account. I just did this the other day, and it took about 2 minutes to make the change. Your remaining salary post-tax is then deposited into your checking account, where you can also set up a recurring, automatic transfer each month from your checking account to your savings account. If you have any debt, you can also easily set up automatic transfers through your checking account to your outstanding debts. Again, you avoid late fees this way and can get out of debt faster.
Lastly, you’ll create a recurring, automatic transfer from your savings account to your Roth IRA. Using our Stairs of Personal Finance, you should know around what value this recurring transfer should be for yourself personally.
And with that, you’re done. Bills covered, savings covered, and investment accounts growing. Seamlessly and effectively. Personal finance should be this way for everyone – stop micromanaging everything and go enjoy your life. You should book your next vacation to reward yourself.
How to Automate Through Your Banks
I’ll definitely dive deeper into this in a course I’m creating right now. I’ll walk you through the process of setting everything up at your bank. For general direction though, I’ve included below the tools you should be looking for:
Credit card monthly full-balance payments: this should be done from the side of the bank your credit card is with. You can find the option to set up automatic payments each month through their “pay bills” tool. You’ll want to specify the date this money should be transferred, as well as check the box that you would like the statement’s FULL VALUE to be paid each month. That way you never carry interest.
401(K) transfer: you can change your percent contribution easily through your 401(K) service provider’s website.
Checking and savings account transfers: whether you’re transferring from checking to savings or from savings to your Roth IRA, these automatic transfers should be done from the account from which you are transferring. So when you are setting up repeating transfers from your checking to your savings, you can find this within your checking account tools under “Transfer money”. Similarly, you’ll be able to find the same tool in your savings account when you’re setting up your repeating transfers from your savings to your Roth IRA.
Life Just Got Much Better
With all of the time and money you’ll be saving, what are you going to do? Where are you going to travel? What experiences are you going to make a reality?
Minimalism and your automated financial system make for a great life. You never worry about your finances, you get to spend generous amounts of money on your hobbies, and you show up to retirement with millions of dollars in your savings. And you spent only a margin of your time managing your money compared to all the freaks out there who try digging into the details to squeeze out a few dollars here or there. Suckers. Research shows that active investing hardly ever beats the market. Complete waste of time when you can automate and excel without any effort on your end.