6 Hacks to Automate Your Financial Life, Diversified Wealth6 Hacks to Automate Your Financial Life

By: Andrew Rosen, CFP®, CEP®

Almost all of us professionals can relate to the picture I am about to paint.  The alarm clock dings way too early; that’s the start of our day.  We shower and get ready for work. Then the mayhem begins!

We get the kids ready, drop them at school, and get to work on time.  We all work nonstop through the day, only to come home to more mayhem.  We shuttle the kids around to all of their activities. Then there is homework, dinner, and bedtime.  The day ends with a collapse!  Then we rinse and repeat; the cycle begins anew.

It’s as exhausting to write as it is to live!  But, what didn’t you hear about in this typical day-in-the-life of a professional with a family?  It’s how they spend hours tending to their finances.  I see it every day.  Financial lives are piecemealed together because this part of their world falls to the bottom of their never ending “to do” list.  In some regards, it underscores the need to delegate these responsibilities to a financial advisor.  With that being said, I’ve created 6 hacks to help you automate your financial life and get you set you on the right track.

Hack 1: Auto Bill Pay

I am a huge proponent of this and it all stemmed from one missed credit card bill.  Years ago when my wife and I were starting our family, things naturally became hectic.  We had about 10 credit cards for different items. I pride myself on being on top of my finances.  But, to my dismay, I actually missed a credit card payment!  Needless to say this financial planner lost his mind.  “Never again,” I said.  So, I went on an automation binge.

Today, there isn’t a bill I have that isn’t set-up on auto pay.  Mortgage, car payment, credit card payment, you name it and it gets paid on time.  Every time!  This is a critical step to a healthy financial life, as I have excellent credit these days and no collections people knocking at my door due to a missed bill.

Hack 2: Auto Save

We all have those short to middle term target goals — buy a car, house, or plan that big vacation.  Whatever the expense, set-up a high yield savings account (like this one at Live Oak Bank).  From there, have a monthly debit from your checking account to your savings account.  Not only will you earn more money, but you’ll have dedicated accounts for those next purchases.  It will be crystal clear when you can afford them and knowing you are on track will feel so much better.

Hack 3: Auto Invest

Most of us aren’t saving enough; that’s a fact!  We also have a million excuses as to why. Most start and end with, “I don’t have any money left over at the end of the month.”  What if you reprioritized your finances and started investing on a monthly basis first?  Then whatever is left over at the end of the month is spent on discretionary items.

You can start small.  Get a regularly automated investment account.  You can even have multiple.  One can be for retirement, one for future unknowns, and one for college savings.  Compound interest is a beautiful thing.  If you just automate your investing, you’ll be amazed at how quickly your small nest egg grows.  I have one client who for almost two decades has the dedication to write me a check every month into his investment account.  Although I do admire this individual, I don’t recommend it for the masses.  Rather, I say automate and be set free.

Hack 4: Auto Increase

Most 401(k)s have a little feature called “auto increase”.  This feature allows your 401(k) contributions to increase every year by one percent until you hit the maximum allowable.  This great feature can make a huge difference in the long term.  The majority of us won’t miss a 1% increase pre-tax into our 401(k)s.  Instead of forcing you to login to your accounts and make the tough decision, leave it to automation.

Hack 5: Auto Rebalance

Rebalancing is generally a feature to most 401(k)s and investment accounts.  We do it automatically for most of our clients. However, there are many accounts to which we don’t have the access to facilitate this automation. This hack can really come in handy on a regular predetermined (typically annually or quarterly) basis.  At those intervals, your accounts will rebalance back to your desired risk profile and allocation.  This prevents one asset class from swelling, thus giving you a disproportionate blend of assets.  The studies show this generally leads to a better rate of return on your money.

Hack 6: Auto Budget

Most of us living this hectic professional life have money leaving as quickly as it is earned.  If it’s difficult to get a grip on what and where you are spending your money,that is a real problem.  How can one begin to budget or even financial plan if they don’t even know where their own money is being spent?  Simply put: they can’t.

There are a lot of great tools and resources out there to help (like the free mint.com or the paid ones like Quicken).  There is even the really expensive proprietary ones that financial planners use.  These sites or software connect all your spending accounts and can easily categorize most of your expenditures.  They run the gamut on ease of use and functionality.  The reality is, I am less concerned with which one you use.  But, use one to get an understanding of your financial outflow.

Hacked Out

We’ve all heard the acronym, “K.I.S.S” – Keep It Simple Stupid.  I live my life by this mantra.  When it comes to finances, much of it is complicated (as it should be).  There are plenty of areas you can keep it simple to help you be in a much better financial position than before.  Automation is one of the greatest ways, especially given the plethora of technology available.  I encourage you to try these hacks for yourself and automate like you’ve never automated before.

OK… I’ve got to go.  My wife is calling.  Back to the mayhem!

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Andrew Rosen

In his role as Financial Planner, Andrew forges lifelong relationships with clients.  He coaches them through all stages of life and guides them to better achieve their life goals.  For more information about Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Find out more about Andrew Rosen, CFP®, CEP®
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