How to Automate Your Finances to Reduce Stress
April 15, 2021 by Eileen Loustau
If you are like most people, you probably have many things competing for your attention. Work schedules, family gatherings, school events for the kids, getting groceries, and taking care of the laundry. Managing your finances, like paying your bills and managing your savings, is another.
It can be easy to feel overwhelmed with so many things on your to-do list. The good news is that you can automate some of them to free up time and brain space. Here are a few ways that you can automate your finances.
Automate Direct Deposit
Direct deposit has become the typical way to receive a paycheck. If you don’t already have direct deposit set up, that should be the first step you take. It’s one of the easiest things you can do to make your finances more efficient.
You may also want to split your direct deposit into multiple accounts, depending on how you organize your finances. Many payroll providers will let you direct your paycheck to multiple accounts.
For example, you may handle your day-to-day spending from your checking account, so you’d direct a portion there. But maybe you have a separate account set up to pay off a car loan, student loan or your mortgage.
If it is too cumbersome to change your direct deposit, you could also just automate moving money from your checking to your savings accounts. Automation will not only free up your time but increase the likelihood that money gets moved to savings! It’s easy to forget about emergency and long-term savings when you have so many things that require your attention now, so why not just automate it.
Setting aside money for emergencies is one of the most important things you can do to relieve financial stress. Not only will your emergency savings be a big help when you need it, but just simply knowing it is there can provide you with a sense of security that relieves anxiety.
Increase and Automate Your 401(k) Contributions
Retirement is a big goal, and most people will need to save consistently to reach it. Do some planning to figure out how much you need to save each year to reach your target retirement goal. There are a lot of great retirement planning tools out on the web.
Ask yourself if you can up your retirement contribution. Many 401(k) providers will let you increase your contribution over time automatically. Make sure that feature is turned on with your 401(k) provider and you probably will barely notice the change in your paycheck.
Regardless of how much you are saving, make sure that you contribute at least enough to your company 401k to receive the employer match (if they offer one). Employer matching is some of the easiest money you’ll ever receive, and it goes directly toward helping you achieve your retirement goals.
Remember to take a look every year to see if the IRS has changed the maximum you can contribute. Studies show that making even small changes, say when they raise the limit by $500, will make a significant difference over a potentially 30-year time horizon. And if by chance you are turning 50 (or are already over 50) you can also make additional catch-up contributions which really add up.
Whether you are just getting started, or happily in retirement, automating your deposits, savings and retirement is a fast, easy, and efficient way to give your more control over your financial health.