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?