4 Ways to Automate Your Finances

I understand, managing your money can be really time consuming and you’re just not that into it.  Between trying to live life and taking care of your family, playing with numbers can be unexciting and low on your priority list.

It’s ok to admit that managing money doesn’t excite you and the good news is that it doesn’t have to be exciting for you to be successful financially.  It use to be that you had to sit down at your kitchen table with your checkbook, a pencil and a glass of wine and work the numbers all night.  Now there are a ton of amazing tools on the internet that you can leverage to do the dirty work for you.

Luckily there are many ways for you to automate your finances!  We’re going to cover the four main categories you should be concerned with and the tools you can use to make things easy.

Automate Your Credit

I think you would be crazy to not be concerned with your credit.  If you have debt, you should be particularly concerned with your credit rating as it will affect the rates you pay and ultimately the amount you owe in interest.  If you’re debt free (and I hope you are), you should still care about your credit rating.  If you’re buying a home, looking to start a business or even in some cases getting a job, terrible credit can come back to haunt you.

The good news is, there are a few awesome services out there that will not only help you track your credit but they will give you suggestions on how to improve it and in some cases go to work for you to challenge the negative marks in your credit history.

First and most importantly you need to monitor your credit history.  While there are plenty of pay services out there that will monitor your credit for you, I don’t think you should pay for this service.  I also think that beyond monitoring, you should get suggestions on how to improve your credit for free.

I’ve been using Credit Karma to monitor my credit for awhile and their suggestions were pretty helpful in bringing my credit rating up ahead of buying my own condo.  Little things like closing accounts with a short history and lowering your debt utilization ratio though paying down debt or getting limit increases can go a long way.  There are a lot more suggestions and I definitely recommend you take advantage of them since they are easy to do and the effects are pretty impressive.

I would also suggest you get their iPhone app, I find that keeping credit ratings on the forefront of my mind helps me make better decisions when I’m feeling like splurging.  Maybe that doesn’t matter as much to you but you can at least subscribe to the push notifications so you at least know when you’re doing something that’s having a negative effect on your credit.

However, probably the most important tool is the one that fixes the existing negative remarks on your credit.  I think you’ll find that it really isn’t that difficult to give your credit score a facelift as nearly every item is open to being contested.  The problem is, we’re inherently terrible at contesting negative remarks because 1) We have no experience in it and 2) The credit companies won’t take you as serious as a professional third party.

While I luckily haven’t had a need for a credit repair service, my best friend from college did.  In college is was pretty immature and didn’t pay his bills, like any of them.  We told him he was crazy but I think he figured it wouldn’t catch up with him or wouldn’t matter.  Needless to say it did catch up and it does matter.

He used CreditRepair.com and they were able to clear quite a lot up on his report, it was pretty surprising.  Of course they didn’t get everything, if only it were that easy.  The service costs $89 so it’s definitely not cheap but I figure if you’ve got some skeletons in your closet, the price might not be so high to get a few of them removed ;)

Automate Your Budget

Personally, I think automating your budget is the most important single thing you can do.  You really do need to be alerted when your spending gets out of control or a rogue purchase hits your account that you weren’t aware of.  Often times issues can’t be put off forever and it’s really hard to fix the “not having enough money for rent because you went out drinking last night” problem.

That’s where the killer free online budgeting tools come in.  LearnVest is great, it’s a new unique way to budget.  It’s pretty different from Mint.com, however I’ve found that most budgeting newbies warm up to LearnVest the fastest.  Since they’re both free I definitely encourage you to try out both to see which works for you.  The worst thing you can do is pick a tool that doesn’t fit your style and then you never use it.

Both of the tools have the ability to learn your spending habits and automatically categorize your spending for you.  As a result you really only need to spend maybe an hour a month planning your budget and LearnVest/Mint do the rest for you.  They’ll even alert you if there is weird spending going on.

They also both have iPhone apps so you can check your money and budget on the go.  Often times a quick 5 minute effort on your phone every week or so can keep you on track to save.  If you’re serious about being financially fit, you must budget.

If you want to learn more about how to budget or how to use a budgeting tools, check out my articles Budgeting for Dummies, Setting Goals for Big Purchases and Don’t be Cheap, Be Smart. Budget!

Automate Your Bills

If you’re terrible at remembering to pay your bills then you’ve got to automate it.  Bill paying is one of the biggest reasons for destroying your credit and getting yourself into debt.  Beyond the obvious downsides to missing your payments I would ask you, why would you even bother trying to remember the dates you have to pay your credit cards?

I’ve got my AMEX bill, my VISA bill, my Target Card bill, my Amazon.com bill, my Macy’s bill, etc… and that’s not even the half of it.  If I had to constantly worry about remembering the dates for each of these cards my brain would be paralyzed   I mean, you’re eating up all your brain’s storage capacity on unimportant dates when you could be clearing your head so you can get organized and be productive!

Personally, I use Manilla to manage all of this madness.  Like most of the financial tools we discuss on this site, it’s 100% free to use and it will seriously improve your quality of life.  Get rid of the stress of remembering these silly dates and just use it already.  Be sure to thank me in the comments ;)

Automate Your Investing

This is my personal favorite section and even if you have a bit of work to do on your finances, this should be your favorite part too.  Why?  Because even if you only have $100 in your savings, you should be able to let it sit for a few months and come back and find $110.  The banks won’t offer you that, based on current bank interest rates you’ll need to wait an entire year and then you’ll just find your account at $100.85.  That’s insulting!

The core belief of my No Effort Investment Strategy is that you should really just “set it and forget it” with your investments.  I don’t think that I have a deep enough knowledge of the markets to beat day traders and more importantly, I don’t have the time.  I’m too busy living my life and going on vacation to micro manage my finances.  I hope you feel the same way because honestly, who would choose staring at stock tickers over a margarita on the beach with your loved ones?

That’s where Betterment comes in.  I love it and I’ve been rocking some serious gains all year.  Sure I have it cranked up to a 95% stock allocation but we’re in a recovery period.  There are lots of profits to be had and I’m not one to miss out!  If you read my blog you’ll notice that I’ve mentioned Betterment quite a lot.

The reason is because that beautiful company is largely responsible for my current financial situation.  I think it’s very important to save money, it’s the core of any good financial strategy.  However, if you are only saving then you’re leaving quite a lot of free money on the table.

Imagine if you saved $1,000 every year and got an average 8% gain every year.  In 10 years you would have $15,346 and roughly 33% of that would be free money due to your investments.  You can’t ignore money like that!

Put Your Computer to Work for You

Some people like being very hands on with their money.  If you have a lot of it and like numbers, I imagine it could be fun.  However, I think that if you spend so much time with your money it’s defeating the purpose of earning that money in the first place.  Money should be a tool that allows you to live your life as you want, not a time consuming nightmare.  I work to live and my goal is to live with work as an optional choice.  I want that for you as well and it’s really not that difficult!

Have you already automated your finances?  Do you need help?  Like to share a tool that you think I missed?  Share it in the comments!

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  • http://www.debtroundup.com Grayson @ Debt Roundup

    Good article Andrew. I am a fan of Betterment. I have been using them since August and are hovering around 8% right now. I am also a fan of Credit Sesame because it provides some good insight. Nice list of tools.

  • http://www.escapingmydebt.com Alan@escapingmydebt

    These are great tips. I have never automated my budget before but it does sound like it could be very beneficial. I am however a little scared to automate my payments. The reason is that I feel like if they auto pay, I will not review them as often or ever. I have reminders set up all the time to remind me of the upcoming payments. Also, some payments change from month to month that I need to manually adjust anyways. For instance if we have a little extra funds that I could put toward one of our debts.

  • http://wisedollar.org Jose

    I’m in an interesting position with automating bill payments. I pay my own bills manually (I do pay them online wherever possible). I like the capability to direct funds as needed to where they will serve the best purpose. Since I have taken over my Mom and Dad’s bills, I have all of their bills on autopay, I basically keep an eye on their account for any unusual activity and to make sure there’s more going in then going out. I have to admit I like it. Maybe when I pay off more of my obligations and debt (simplify my financial life) I might gravitate towards automating my own finances.

  • Troy

    Great article! I actually haven’t implemented any of these ideas – I’ll have to look into them a little more.