5 Steps to Automating Your Finances – Save Time and Money

The words "automate your financial life" written on paper next to a pen and coffee

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Taking care of your money all the time can be tough. Automating your finances is a helpful way to keep up with your bills while still ensuring that you save money and invest for your future.

It’s quite possible to take care of everything automatically through bank websites, automatic bill pay, and automating recurring transfers. What may take you a few hours to set up could save you loads of time and money as you’ll help prevent yourself from ever being late to paying a bill again while also saving money without having to think about it.

In this article, we’ll discuss what it means to automate your finances, accounts that can be automated, the key benefits of doing so, and then go into the actual steps to automate as much of your finances as you feel comfortable.

What Does “Automate Your Finances” Mean?

Automating your finance means setting up automatic transactions across your personal finances. This means direct depositing your paycheck into your bank account and then transferring money via automatic withdrawals set up to send money to other places, such as your savings account, retirement accounts, and paying as many of your bills and credit cards as you can through autopay.

What Are Examples Of Accounts That Can Be Automated?

The following accounts are examples of accounts that can be automated so that you don’t have to think about them.

  • Direct deposit to your checking account
  • Savings account
  • Credit cards
  • Utility bills
  • Retirement accounts
  • Brokerage accounts

By linking up your accounts and setting up automatic recurring transactions, you save time and reduce the chance of being late on or miss a payment.

Steps to Automate Your Finances

You can automate your finances with 6 straightforward steps. Let’s get right into them.

1. Open Accounts to Automate Your Finances

You’ll first need an account to hold your income. A checking account works best, as you can then connect all of your accounts and online bills. This account should be easy to access, have a free bill-pay system, and optimally not have any fees associated with using it. 

Consider having a balance of at least two months’ worth of bills in this account to prevent having an accidental overdraft. If you’re unsure how much your bills are on average, now is a great time to create a budget to work those numbers out.

To have money regularly flowing into your checking account, set up direct deposit from every income source possible, including your job and any passive income sources you may have.

If you’re unsure what bank to use for a checking account, Charles Schwab Bank has a great checking account with many fees waived when you also open a brokerage account. Use this Charles Schwab referral link to get up to $500 added to your account after your first qualifying deposit.

Next, open a savings account. You’ll use your savings account as both a way to save and as an emergency fund. If you have more than six months of living expenses saved up in your savings account, consider opening an IRA or a taxable brokerage account for investing additional funds.

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2. Set Up Direct Deposit for Your Paycheck and Other Income Sources

In order to start the automation, have as much of your income direct deposited into your checking account. This includes your job and any other passive income source you may have.

By using an automatic deposit method such as direct deposit, you’ll always have funds available for when you automatically pay bills and transfer funds. 

Ask your employer about how to set up direct deposit. Other income sources, such as investment income or business income, may have options as well.

3. Pay Yourself First

Pay yourself first every month by transferring a portion of your income towards your savings account. If you don’t have at least three months of living expenses in your savings account or emergency fund, contribute as much as you can. 

If you don’t have a savings account, check out CIT Bank. CIT Bank has a competitive interest rate of up to 20 times the average interest rate of a brick and mortar bank and encourages you to save each month by providing a higher amount of interest each month to those who deposit at least $100 monthly or maintain a $25,000 balance.

By paying yourself first, you’re forcing yourself to save money, which helps you in the long run. 

If you have sufficient money saved, consider setting up an automated transfer to one of your retirement accounts or brokerage accounts and begin automated investing next.

3. Hook Up All of Your Bill Accounts to Automatic Bill Payments

When you autopay your bills, there’s no chance that you will be late or miss a payment. And because you have at least two months’ money worth of bills in your checking account, you don’t have to worry about overdrafting your account when your pay your bills automatically.

Many companies where you have recurring payments will have an option on their website to automatically pull money from your checking account each time a bill posts. This includes credit card companies, utility companies, your internet, cable, and phone companies, and more.

With credit card companies, oftentimes, you can choose how much to pay automatically. You can choose to pay the entire balance or at least the minimum payment to avoid late fees. 

Note: For accounts that don’t have an autopay feature or for one-time bills such as medical bills, use a bill organizer. That way, when your bills come in the mail, you can place them in the bill organizer to be paid as soon as possible. One way to organize bills with an organizer is to use Bills In and Bills Out categories for bills that need to be paid and bills that need to be mailed.

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4. Automate Contributions to Savings and Investing

Now that your bills are automatically paid, consider automating a transfer of money to further savings or investing.

The more you can invest now, the more your money will grow over time. Many financial planners say that you should invest 10%-15% of your annual income. If you’re making $1000 per paycheck, you’ll want to invest a minimum of $100 to $150. The more you invest, the more you’ll see in your retirement.

For those who have a lot to invest, it makes sense to diversify and invest in multiple areas. Automating this makes investing easier.

5. Increase Automated Savings and Investing Over Time

As your income rises over the years, you might be tempted to spend more money because you’re earning more. When your earnings increase, allocate some of your increased earnings to your savings and investments. For example, if you get a 6% raise, consider allocating 4% of that raise to your future investing and then bank the 2% remainder for your own enjoyment.

When you allocate more money to investing and savings, you will be able to retire earlier and have more money for things such as your children’s college funds and future purchases down the road.

To automate your finances via investing, most brokerages have an auto-invest option. M1 Finance allows you to automatically invest as well as automatically direct deposit into your account. This way, you can set your investments on autopilot and not think about them until you need the money later in life.

5 Key Benefits of Automating Your Finances

Automating your finances has several benefits, which will take some of the burden off you when moving money around and keeping up with saving and paying bills. Let’s discuss them.

Less Likely To Miss Bill Payments

With bills set to autopay, you’ll be less likely to miss a payment because you’re no longer paying manually. You aren’t worried about remembering dates or wondering if you paid a bill or not because the bills automatically pay on the dates you scheduled them when you set up your finances to be automated.

Makes You Pay Yourself First

One of the steps to automating your finances is transferring money to your savings account each month. This is how you treat yourself as an expense and save money before you spend. Saving before you spend, versus spending before you save, is a great money habit that will help you reach your financial goals.

Saves You Time

It takes an initial time investment to set everything up, but once that’s done, your finances will take care of themselves, saving you time each month. It’s quite possible that you’ll just need a few minutes each month to review everything versus having to pay each bill and transfer money around manually.

Leads You To Be More Frugal

You’ll be saving much each month on autopilot, which will leave less money for frivolous spending. This means you’ll start living more frugally while also having more money in your bank account each month.

Helps You Reach Your Financial Goals

With fewer overdraft fees, late payment fees, and more money saved and invested each month, you’ll have an easier time reaching your financial goals. You may find that you will also be able to set larger financial goals as time goes on. These could be becoming debt-free or retiring early, for example.

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Wrapping It Up

Automating your finances saves time and money over the long term. 

In this article, we reviewed the benefits and process of setting up and automating your finances. You learned how spending a few hours to set everything up can save you time each month while also saving you money. 

How do you plan to automate your finances, and what benefits do you most look forward to?

18 thoughts on “5 Steps to Automating Your Finances – Save Time and Money”

  1. I agree with this. To be religiously devote to your savings, and investments, you need to automate it. To make sure you’re paying all your bills and are not being delinquent in terms of meeting financial responsibilities, automating will do the trick, too.

    My bills are automated. But I think I should do the same for my savings and investments. Thanks for this tip.

  2. I have some of my bills hooked up to automatic payments but sometimes I prefer to do it myself so I know how much is in my account before paying things.

  3. Connecting bill accounts to automatic bill payments is such a relief and now it’s time to automate finances for saving time and for peace of mind.

  4. Glad I came over this post. Indeed such a great reminder for us to be conscious of our finances.

  5. Monidipa

    To be very honest, these are great ideas. I am doing the same though!

  6. Great tips on how to Automate your Finances. I guess I do everything you listed except manually. For example, you mention pay yourself first. Well I actually have a written envelope with my Ally High Interest Savings Account or other Investment accounts that gets added to my mailbox of bills and gets paid as if it was the electric company or my cell phone Bill. I guess, with true automation, it is more convenient and less chance of me skipping it so maybe I should evolve a bit.

  7. These are great tips, thanks for sharing. Connecting to auto pay for bills are a life saver for me.

  8. I am slowly switching over to having everything automated. I am so tired of having to keep track. Just set it and forget it.

  9. Chesz D

    I’m adopting this type of automation although I’m not fully relying with it due to hacks and scams regardless if the website has a strong Firewall.

  10. Mayuri

    I completely agree with you, automating your finance release you with stress, late payment charges and above all, your credit report. I am going to share this to my friend who has just started working!

  11. Kevine

    OMG, this is so true, I find that when I am intentional and automate I am able to be consistent.

  12. Agree with this 100% I usually save by setting up an automatic plan so I don’t have to remember putting money aside

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