How to Automate Your Finances

Wouldn’t it be great to set your financial goals for the year, and then just forget about them? While life does have a tendency to throw the occasional curveball at you, a bit of planning can go a really long way. 

So what will you need? A bit of time, a spreadsheet, and the ability to set up automatic transfers within your online banking system.

1: Your bill calendar

In a spreadsheet create a calendar for the month. The simplest way to do this is to count row #1 as the 1st of the month, row #2 as the 2nd etc. Using your past bank transactions as a guide, add in each recurring bill to the date that it is due.

Make sure you don’t forget general living expenses like groceries, fuel for your car etc. Consider yearly, half yearly, or quarterly bills like electricity, home rates, car registration and servicing costs and work out the amount you will have to set aside weekly/monthly to cover these.

Next, you’ll want to auto-sum all of these amounts so that you know what your total minimum spend is for the month. If you deduct this amount from how much income you earn you will see how much is left over for the month.

2: Decide on your goals

Do you want to go on a holiday? Sign up for an online course? Upgrade your car? Invest your money and start to build a portfolio? Choose a financial goal that gets you excited, where the payoff in the long term will be worth it.

3: Review your income and expenses

Is there anything in your recurring expenses that could be improved on? See if you can find a better price, or ask your service provider for a discount or to price match a competitor. Review your income- is there the option to boost this in any way (even if just by a small amount)?

4: Automate it

Set up either repeating direct debit payments, or automated bank transfers within your online banking system for your regular bills. Set up regular automatic transfers into a separate (no fee) linked online bank account for reaching your savings goals, and another for your long terms bills.

If you want to really simplify things, you could set up another transaction account that is for your spending money only. A set amount (that you decide on) will be automatically transferred into your spending account each week, and used for variable costs like food, clothing, fuel, birthday presents, entertainment etc.

This can make it very easy to see how much you have spent, and how much you have left to spend for the week. Haven’t we all been deceived by our bank balance – thinking we can afford a splurge – only to realise there was a bill we had forgotten about that was due? This strategy plans for that.

Be aware that many banks will offer no-fee accounts as long as you reach a minimum amount for monthly transactions, so do your homework and find out how you can set this up at no cost to you.

You might find that this approach nudges you to get creative with your purchases to make things stretch further, and you’ll be amazed by the value you can get for your money when you put your mind to it!

5: Sit back and watch your savings grow!

It’s all set up and there’s nothing more to do, and every day you are getting closer to that poolside cocktail in Bali. Jumping out of a plane. Renovating your kitchen. That relaxing weekend getaway. Whatever it is that you are dreaming of!