This is Andy Hill from the Marriage, Kids, and Money podcast. I’m here on behalf of Tiller to share five wealthy habits developed by using automation.
What does automation actually mean when it comes to our finances?
“Financial success isn’t magic, it’s engineering.” – Forbes
Automation is essentially a way to pre-commit to financial goals by setting up electronic transfers that move your money according to rules you set in advance. Set ’em and forget them.
Automation is pretty much a financial superpower. It’s much easier to achieve goals like setting up an emergency fund, paying down debt, or saving for retirement with technology doing the work for you – and without you having to think about it.
Let’s review five wealthy habits developed by using automation.
1 – Avoid late payments.
Fees from late and missed bill payments can prevent you from reaching your financial goals. But when you automate your monthly bills, you’ll never have a late payment again.
Even if you don’t pay the balance in full each month, you can at least make a minimum payment. That brings us to our next wealthy money habit…
2 – Control your money.
If you’re having trouble staying on top of your finances each month, then you need to take advantage of an automated monthly budgeting system like Tiller’s spreadsheet-based system that automatically imports your financial data from all of your accounts every single day.
That way you don’t have to guess how much money you have left in your various accounts, or manually import the information yourself.
3 – Boost your savings.
Let’s say you want to grow a savings account so you don’t have to keep putting your emergencies on that high-interest credit card. Automation to the rescue.
Sign into your bank account and set up a recurring weekly or monthly deposit based on your savings goals.
For example, if you want to have a three-month emergency fund in case you ever lose your job. If your expenses are $3,000 per month, you’ll need to save $9,000 dollars.
Let’s say $500 is a reasonable amount for you to save each month. You’ll fully fund your emergency fund in 18 months. If can save $1000 per month, then you’ll get there nine months.
Whatever your goals are set up a recurring deposit each month from your checking account to your savings account.
And then let it go before you know it you’re gonna have a big fat juicy healthy emergency fund number.
4 – Grow your retirement savings.
When it comes to retirement savings, automation and compound interest go hand and hand. The more you consistently contribute to your 401k or IRA the better off you’ll be in the future.
That’s because compound interest helps you make money off of your money again, and again, and again. (No wonder it’s called The Eighth Wonder of the World.)
Perhaps your workplace offers a 401k match program. By signing up, you’ll automatically contribute funds to retirement on a consistent basis.
I’ll give you an example. When I started my new job five years ago, I had zero dollars in my retirement. I’ve maxed out my contributions each year, plus received a 15% match from my employer.
Now I have over $100,000 in my account. All I did was sign up for the benefit when I started my job.
That’s a classic example of how automation and compound interest work together.
5 – Invest in the stock market.
If you want to grow your wealth outside of your retirement savings, open a brokerage account with a low-cost broker like Vanguard or Fidelity and set up automated contributions.
Consider low-cost index funds that invest in major market indices like the S&P 500. This way you’re diversifying your investment, instead of just investing single stock like Amazon or Netflix.
Let’s review those five wealthy habits one more time:
- Number one: avoid late payments.
- Number two: control your money
- Number 3 boost your savings.
- Number four: grow your retirement savings.
- Number 5: invest in the stock market.
I hope these automation habits give you a happy and wealthy future, my friends!