I didn’t used to automate savings, but slowly, I am taking the steps toward a simpler financial system.
My system is set up thusly: net pay (minus 401K, taxes, insurance premiums, etc.) is deposited into my savings account. I then manually move X amount into my checking account, usually twice a month.
Irregular income (blog revenue, bonuses, gift money, etc.) aren’t designated for anything, per se. I usually save 75% of the money, with the rest going to fun things.
Right now, the 3 biggies that I automate are:
- 401K. The easiest of them all. I don’t even see the money, it just goes away to the magical happy place that is Retirement Land.
- Car insurance. I’ve had an automatic debit from my checking account for a couple of years now. It works great.
- Student loan. Again with the automatic debit. I used to manually pay this bill online, but have overpaid by a couple of months because I forgot that I had made a previous payment that month. Because my loan is interest-free, there’s no point for me to pay ahead of schedule.
I don’t get any other recurring bills (utilities and internet are included in rent). I manually pay my credit card bill online because it fluctuates month-to-month, and I want to have the opportunity to take a look before I pay.
To what extent do you automate your finances?
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My 401(k) and savings accounts are fully automated on payday. My cable and cell phone go to my credit card, but everything else is paid manually (including the credit card, so I can analyze the bill).
I am totally automated for most expenses. I have 401(k), Roth, insurance, and even a $5 donation to a non-profit I picked taken out by my company every paycheck. From there, I use ING as a hub. I make an automatic payment every payday to my auto loan and student loans. Every month on the first I use a recurring bill pay for my car insurance and cell phone.
The only things I do that are not automated are pay rent and my credit card bill. I write a check to the landlord and pay my credit card online through the card website.
Automation of finances is one of the best inventions ever, in my humble opinion.
Great post. I automate very little – only things on auto payment is rent and BF’s car loan. Everything else I do manually – a, because I’m a control freak and b, our income varies. I’d feel much more secure about automating things with a steady income.
FB @ FabulouslyBroke.com
I hate automating anything. Drives me crazy. Totally nuts. I always forget it’s coming out, unless it’s every month, $500 for debt (which I thankfully do not pay any longer), and sometimes I just forget to take care of it
Which reminds me.. I have to pay my cellphone bill.
i have my paycheck deposited into my checking account (i’m paid bi-weekly). my roth ira contributions and student loan (currently in deferment) are auto deducted from my checking account. my cell phone and netlfix are auto charged to a credit card (with internet to soon follow).
i make payments to my credit card “manually.” this is also my preferred method for moving money into my online savings accounts.
I don’t automate anything, because I am too anal to not do it myself. When I was working, I had direct deposit, and I guess that’s kind of automatic, but that’s money going in and not coming out! These days, I *have to* manually deposit the unemployment checks, and I manually pay my bills each month. Living paycheck to paycheck, I just can’t get comfortable with anything being automatically taken out of my account! I feel much more in control doing it myself.
Hi, good post. I have been wondering about this issue,so thanks for posting. I’ll definitely be coming back to your site.
I have nearly everything automated….
My pay…My three utility providers (enmax, shaw, bell), all of my savings accounts (ING, 3 seperate acounts), RRSP (CIBC), Shares (I buy through work – comes off my pay)… ect.
I like to maintain control over what goes where so the only things I automate are my 401k contributions and savings account contributions.
I have some of my expenses automated: bus pass (I get it mailed to me, pay less, and don’t have to worry about them running out), end of the month student loan payment (but I pay more on it on the 15th of each month, to reduce it quicker), & RRSP deposit.
Everything else I do manually, but the only other expenses that come out of my account are my credit card payment (all of my purchases get put on the credit card); the rent cheque, my transfers to my savings accounts, and my cheque to be deposited into my “joint expense” account with my boyfriend (which is also used to pay off my credit card).
I do worry though that the automatic expense of my student loan payment is going to come back and bite me in the butt though, since it’s scheduled to come out on the 30th for x number of months (whatever the original 15 years correlated to). Now that it should be paid off in three years, I’ll have to call them closer to that final payment date and figure out how to undo that auto-process!
I automate everything. I have only one credit card that I avoid using so I auto pay my cell bill every month on it then auto pay the credit card the next pay period- just to maintain credit history. I would suggest though the tool that only allows debits after you approve the electronic payment. My bank has a mobile banking application that updates right away- love love love this feature. It’ll let you see the last 5 transactions, move money between accounts, and even manage bills.
Pretty cool post. I just came by your blog and wanted to say that I have really enjoyed browsing your posts.
Any way I’ll be subscribing to your feed and I hope you post again soon!
I’m required to have direct deposit and I have some paycheck deductions. Otherwise I only automate things when I’m directing things from my end. So I’ll use auto bill pay from my bank, but I won’t authorize anyone to auto debit my account. The only one who is allowed to remove money from my accounts is me.
I would like to be 100% automatic, but right now there are still things I have to do manually.
all bills and debt payments are automatic, but I have to make extra payments manually. I still have to go to the ATM for cash. When I turn on my retirement accounts, you best believe they will be automatic.