Eric Rosenberg* has been working on his own strategy to make building wealth automatic.
The hardest part about saving money every month is remembering to log in to your bank account, click the transfer button, and move the funds.
If you automate your finances, the money will show up in the right places without you having to do a thing, or remember to do anything at all.
I’ve been improving on an automated money strategy for more than a decade.
Below, find my four-step process to make your money automatic and get closer to your goals.
Step 1: Start with your paycheque
Your money automation begins before it even hits your bank accounts if you do things right.
If you are paid via direct deposit, there are two good automations you can put into place right away.
First, take 100 per cent advantage of employer matching for your superannuation account.
If you don’t, it’s like leaving money on the table.
Second, most employers allow you to split your paycheque into multiple accounts.
Most people just put it all into their chequing, but you can automate your savings by splitting that direct deposit into two or more deposits.
Step 2: Set up automatic bill and credit card payments
Missing a credit card payment due date puts a late payment on your credit report for up to seven years.
Rather than risk a slip-up that could take the better part of a decade to fix, you can automate your minimum payments.
Set this up at your credit card company’s bill payment feature online.
You can also automate full payments for your credit card, but you’ll only want to do that if you’re regularly checking your card’s activity, in case of any fraud or other issues.
You can also automatically pay most utilities and other bills.
Put everything you can on a credit card to maximise your rewards.
Everything else can get paid via electronic funds transfer.
Just make sure to pay off your credit cards in full every month to avoid paying interest.
Step 3: Fund retirement, investments, and other goals
Now that the basics are covered, it’s time to use your money to grow your wealth and help you achieve other goals.
In your bank and investment account’s online transfer feature, you can set up scheduled transfers into other parts of your financial life.
As long as you can afford it, you can automatically save an emergency fund, vacation or travel fund, save for a goal like a wedding, or automatically add to a brokerage account that you want to use for dividends as part of an early retirement plan.
There are no rules.
You can be creative and turn on the automatic savings to reach your goals.
Just be careful not to over-automate and overdraft your account.
Overdraft and insufficient funds fees can be expensive.
Take care to avoid them.
Step 4: Round it out with round-ups and apps
You can also save more money automatically with apps that round-up purchases and put money on other savings schedules for you.
One thing they all have in common is that they make savings automatic.
* Eric Rosenberg writes on finance and entrepreneurship. He tweets at @EricProfits. His website is ericrosenberg.com.
This article first appeared at www.businessinsider.com.au.
