Should You Automate Your Finances? Pros and Cons Explained

 Is automation the answer for better finances? Today, we're going to dive into why automation can be a great solution and why automation could be the biggest detriment to your finances. So today's question, should I automate my finances? We are going to discuss this topic in a way that you can determine your automation solution. Now, what do I mean by that? So I want to share my. Not the whole story, as I do have an episode all about cash envelopes and when I use them, but I want to share when I created my cash envelope system, that I didn't just do it blanket like everyone else. So, cash envelope system means you are using cash for pretty much everything. So, my personal system for cash envelopes was I did all of my bills on automatic pay and then I used cash for everything else with the exception of fuel. I didn't want to take the time. Yeah, it probably would have been fine, but I didn't want to take the time to walk into the gas station and give them the cash and then go out, pump the fuel, go back in, get the change if there was any, right? I just didn't want that process, so I left the money in my bills account and I used a debit card. Now, more than likely, you're not gonna overspend fuel, so I still felt like the cash envelope system would benefit me. And like I said, Early, early episodes, I share about my journey on the cash envelope system. And if you are somebody who is not in tune with your money, definitely go listen to that and see how you can create your own system. So as we're talking about creating your own system, and we're answering the question today about should I automate my fan, okay. My finances. I want you to be sure that you're creating a solution personal for you. I am a huge believer that personal finance is personal. What works for one person may not work for another. However, we can learn from each other, what is working for them. And then maybe just doing a slight tweak on it, or, you know, all of the things put together, give you your own idea. That is how you progress and develop. In, you know, managing your money. So diving into this topic, I want to share with you the four benefits of automation, because there is definitely a huge benefit. If you heard me talk about the cash envelope system, I automated my bills. I have been on automation of bills for so many years that really the only biggest headache is when you've got a transfer because you've changed banks or like I just did, and I got to move. But really they're. It's a very simple, easy way to be, you know, taking care of your bills. So, as I share the benefits, the first one is consistency. Automation allows consistency, especially with savings. Setting up those automatic transfers, they can ensure that you are consistently saving, that you're building a savings habit without physically having to do it every time. You know, setting up your bills, you can. Avoid late fees. Avoid forgetting because life has gotten so busy. And by doing so, this helps you maintain a good credit score. So consistency is definitely one benefit. Another thing, it saves time. As I shared in the last episode about creating a money management system, right, a cashflow system, that it saves you time. Everything that can create us having more time is just freeing. And then we're able to dive into those things that we want to, or need to, to be better. So automating routine financial tasks, such as bills, right, such as savings, allows us to then shift our focus. On to future strategic financial planning. So creating the idea of saving time will help you immensely. And so I know a limiting belief that some people have is how do I know that this gets paid if I don't do it, right? If I don't walk it into the place or I don't manually pay online. Oh my gosh, how much time is that taking? What you can do on the flip side is have a checklist, you know, once a week you make sure all of the bills came out. The day it comes in, you know what it is, but you're not having to take the time to actually do it. You check your bank account. Sure enough, it's come out, check off the list and just think how much more time you will save by approaching it that way. It also helps with accuracy. Okay, a couple different ways in this benefit is reducing the risk of human error. So if you are keen in your manual, manual entries, you might have a fat finger, right? That gives you the wrong number, might overpay or underpay or because you're being so careful you are taking so much more time. Also if you're running a check in or going in to make the payment, that person can also do the same thing. And I'm not. Saying that systems are without error. They are just better at it than we are. So we lessen the. You know, room for error, and we have more accuracy. We also avoid forgetting. So the accuracy of it happening while life is going on. Right, we have a big emergency or a life event, or we're on vacation during the time that our mortgage payment is due. Oh, I don't want to pay it early, or you don't have the money because a paycheck hasn't come in. Just think of the ease. That this would have if you had it set up on automatic pay. The other thing it does is it lowers our decision fatigue. Every day we are making constant decisions, what clothes to wear, when we should head out for work, or when we should head out to pick up the kids, or where, what are we doing tonight for dinner, or what am I eating right now, what do I need to go, you know, there's so many decisions that if we have bill pay, Already set up. There is not that decision making because even though you know, you have to make that payment. Same with savings. You've already said, I've agreed to save, you know, 200 a month. You go in to do that. You're second guessing yourself. The room there is the ability that you might not save. You know, going in to pay your bills, you're like, Oh my gosh, this is just, and you're going with a lot of stress. It just is a burden rather than just the fact that you've already committed to this bill. So just pay it. Leave your decision making for those bigger and better things. Who doesn't want to be saving for, you know, your family vacation. So you don't have to use that credit card. You lessen your stress by being able to get yourself out of that fatigue and make more powerful decisions. So what are some key areas for financial automation? And again, as I share these, Hopefully you're thinking about how you can apply one or more of these to you, that it's not just a fell swoop, it's not just a standard. Automation is the thing and I've gotta do it. Really think through all of this. And before we close, I'm going to share some limitations. So make sure you're listening to the end for that. So the key area we talked about savings is also investments. These can be automatic transfers from checking to savings. They can also be with your payroll. They can take it right out, put it in your 401, or they can also put it in your savings checking account. There's a lot of options. So hopefully one of those may feel comfortable to you and you can fit that in there. All of your automatic payments for utilities and mortgages or other recurring bills, you know, just get them scheduled, just get them coming out. And then if you're worried if they're not, make your checklist to make sure and follow up, because I think that's a prudent person as well, is making sure the system went through, making sure it happened. I recently just updated my T Mobile because they are not giving I discount because I was using a credit card, which I understand. However, so I changed it to my checking account. So it was coming out of there instead of doing credit card rewards. And because I did it, I don't know if I did a fat finger but they sent me an email the following day, your payment didn't go through. So you've still got to be a prudent. Looking for that, making sure those things are coming through. If you get an alert on your phone, which is what happened, that you're really following through and making sure those things are happening because there are errors, there are, you know, problems with systems, but less likely with a system than with a human being. Another area for automation is budgeting apps. You can track your expenses they automatically come in, you spend some time there so that can help, you know, free up some time that you've spent trying to make sure you know where your money is going. And the last area is debt repayment. You've committed to paying a certain amount of debt every month, and if that's not automatic, how easy would it be to say, well, I am paying more than the minimum. So I really want, you know, this other item. And so you just kind of don't pay the 200, you only pay 150 or 100. It, it really helps with our success in creating automation. But not all of the time. And I want you to listen to this part because this is crucial. I believe in automation. Everything I've done has been based off of automation. However, if you do not automate with, you know, if you do automate without a plan, you're going to run into some major detrimental financial issues. If you remember last episode, if you haven't listened I'll just share real quickly. My client who had set up automatic pay in a place where her bills account was not going and she got an overdraft fee constantly because her money wasn't where it needed to be. So make sure you have a plan that is number one, saying, I need this much money for bills, and it needs to be at the place I have for automation. And then from that, I know how much I can spend elsewhere, and the other thing is, I know how much I can save. So I'm sure we've all heard it. Pay yourself first. This is a great principle as it, you know, emphasizes the importance of prioritizing savings, however, is lacking the support that people need to be successful. So if you think about, okay, pay myself first, I'm going to pay myself 10%. What if you don't have 10 percent to save? You don't have enough to cover your bills, or you don't have enough to cover your emergency funds, so you're constantly dipping in that space. savings and that pay yourself first, you know, that principle is not working because there's no plan behind it. I love it in theory, but in practicality, it just is not working. So as you head into automation. Create a plan. Now, what do I mean by a plan? Well, first, you need to start with a budget. And I know that is not a subject, a topic that really most people love. And if you're somebody who is struggling with creating a budget, I have something just for you. July 29th, I am releasing a three part article. A podcast series, it's a pop up podcast called the budget breakthrough series. And I will walk you through how to create a three part budget using the power of three framework that I have. So if you listened to the last episode with cashflow management, that will tie those two first steps of the framework together for you to be able to start your journey forward. Go head to the show notes, click the link, get registered so you don't miss that episode that is dropping on July 29th, and you will receive one episode a day, and you will need to listen to those within a week. You will be enlightened, you will find a budget breakthrough. And in that series, I am sharing the biggest mistake probably everybody is making. So be sure to go sign up for that so that you can create a budget plan so that you can add it to your automation plan so that you can free up your time to be able to grow your wealth, your freedom, all of that. All of the things that you truly, truly want from your money. So is automation the key to your success? Is it the solution that you need? While automation offers many benefits for financial management, it's crucial to recognize the limitations and approach automation with your right steps, making sure you have that plan first, that cashflow system. And that you're able to then automate to free up your time to begin planning all of your future and fun that you want to have with money. So I hope this has answered your questions and hopefully you can create your own personalized automation plan.