When you automate your financial life you not only take a lot of the stress away from managing your money, you improve your finances as well.
One study by the National Bureau of Economic Research concluded, “Employees generally do whatever takes the least effort — generally doing nothing — a phenomenon these investigators call “passive decision-making.” For better or worse, 401(k) plan administrators can manipulate the path of least resistance — through automatic enrollment rules, default contribution rates, and other plan design features — to powerfully influence the savings and investment choices of their employees.”
Essentially, the more “passive decisions” we initiate, the more our finances will improve.
Below is a list of 37 different ways you can simplify and automate your finances to save time, save more money, and spend less. (If I missed anything or you have another suggestion, let me know in the comments).
Earning
- Instead of focusing on alternative income streams, focusing on what you do best. Ask your boss, “What results can I achieve for the company that would justify a raise?”
- Sell one thing a week on eBay
- Have a garage sale
Investing
- Choose a quality target retirement fund, with low expenses you don’t have to monitor
- Invest in your 401(k) as the deductions are automatic
- Make any investments automatic through systematic withdrawals from your direct deposit account to your investment accounts
- Use a buy and hold approach
- Stop checking your stocks daily, if you’re investing for the long-term what happens today doesn’t matter
- If you don’t understand what you’re investing in, don’t invest in it
- Rollover any old 401(k)s into a Traditional IRA or Roth IRA
Saving
- For larger purchases set up Google Alerts on popular deal sites. Therefore, you don’t have to actively browse everyday to find something new, you’ll be alerted the instant something pops up. For example, if you’re looking for a wooden desk in Chicago on Craigslist, setup a Google Alert for site:http://chicago.craigslist.org/fua/ “wooden desk”
- Buy less square footage. You won’t be as tempted to buy furniture for rooms you’re rarely in.
- Eliminate a car and use public transportation and car sharing services
- When purchasing a car, purchase a fuel efficient, dependable car which can reduce your trips to the auto repair shop and gas station
- Set a goal and design a plan to become debt free
- Avoid any contract which you can’t get out of
Money Management & Budgeting
- Use a service like Mint or another free online budget software which allows you to track where your money is going
- Have a routine monthly high level review of your finances where you review your expenses, income, and make any necessary transfers
- Use direct deposit
- Pay off your credit cards with automatic payment
- Any utility bills use EFT
- Use a bank that allows you to make transfers via your mobile phone, which prevents any trips to the bank
- For couples, make a plan to get on the same page and avoid small fights regarding how you can spend your money
- Review and update your plan at a minimum once a year
- Have an emergency fund of at least 6 months as the peace of mind is beneficial daily
- Go paperless with all bills and financial institutions
- Don’t write or accept checks from friends. Use a service like Chase QuickPay or PayPal instead.
Insurance
- Combine your home and auto insurance with one insurance company, that allows you to get one bill
- Pay by EFT to avoid any excess fees
- Increase your deductibles so you don’t have to pay any small claims
Misc
- Do an 80/20 analysis of what blogs, magazines, forums, etc… you consume. Those that aren’t contributing in a positive way, stop reading them.
- Make a habit of every time you buy a new piece of clothing, get rid of one
- Once a quarter, take an hour to donate any unused items to goodwill such as clothes, books, and toys
- Set automatic reminders in your calendar to remind you of certain financial tasks you perform routinely such as rebalancing, performing a financial review, updating your net worth, etc…
- Closed out any old accounts
- Use a password management system such as LastPass to remember your passwords
- Scan all your tax documents and store it on a secured hard drive or cloud storage system
About the Author: R.J. Weiss is a CFP® who specializes in individual financial planning at Weiss Insurance Agencies. You can follow him on Google +.
