Putting Finances on Autopilot

If I look back at the best things I’ve done financially over the past few decades, it would be automating my finances.  The most obvious (and possibly important) tenant of finance automation is paying yourself first for your retirement funding.  Given the market returns over the past 8 years, I’m sure happy I did that!  Most corporate employees are auto-enrolled in 401(k) plans now, and many public sector employees similarly are enrolled in 403(b) or equivalent.  If there’s a match, no ifs ands or buts, you need to at least put in enough to receive the full match.  By dollar cost averaging in over a decades long career, plus the match, the rewards are incredible.

Next, I’ve been putting money into the triple-tax-free HSA account in my high deductible health plan.  It acts as a better retirement vehicle that any other option.  And the best part is you can invest it in equities via various mutual funds being offered.  Lastly, I have the kids’ 529 plans on autopilot with monthly investments going in. And then I get to deduct contributions from my state taxes for an added benefit.

Now, on the spending side, there are certain strategies to automate your finances as well.  I try to charge virtually everything and just pay off the balance monthly.  The benefits of charging everything to a card like The Platinum Card® from American Express outweigh any costs (none) as long as you’re not paying late fees and interest payments.  One major advantage is it’s the easiest way to see where all your spending is going!  Who actually documents what they’re spending their cash and checks on?  With a credit card you can simply look at your monthly statements, and if desired, use a personal finance program to categorize spending types accordingly.

Next, I like to automate some of my recurring bills, especially where there is no convenience fee involved.  For instance, sometimes trying to pay a mortgage or taxes can come with a convenience fee which wipes out any rewards.  However, what I do have on autopay is everything from my utilities bills and wireless to cable and lawn services.  This stuff really adds up!  It saves me the time of writing checks or doing auto bill pay when it’s just getting applied to my credit card monthly and then paid as a single monthly bill anyway along with all my other charges.

So, in short, try to automate everything you can.  You’ll enjoy the benefits of having more time back, paying yourself first to ensure you have funds in retirement, and deriving rewards effortlessly.