How We Have Automated Personal Finance Online

Thursday, July 25, 2013, PM | Leave Comment

These days, almost all banks offer online features and benefits that you can take advantage of to automate your personal finances. It may be your neighborhood bank or an International bank as long as it has presence in the wide world of Internet landscape.

In my family, we have automated three areas, at a minimum, and you could do the same.

We have three choices for basic bank accounts: Saving, Checking (expense), and Brokerage – to grow money. Many banks provide brokerage account as well.

Here’s what we have done. Paycheck is directly deposited to our saving account by the employer. Some folks use their checking account for direct deposit. We have found it to be more advantageous to use saving instead of checking account. That’s because we like to save first, then spend. It just depends on your attitude and mindset towards money.

Our goal is to not only make banking easier for us but I think we save some money in the process even if it turns out to be only $5 a month. For us that’s better than nothing.

  1. Automate Savings

    Whatever your source of income is – most probably your paycheck, set up a process with the help of your Human Resources (HR) to make direct deposit to your Saving Account and not your checking account. We already have saved for 6-month emergency fund.

    Set up a threshold of your total expenses – fixed and variable. Transfer the expense money to your checking account to pay all your bills online.

  2. Automate Bill Payment

    We bank locally in our neighborhood. However, the bank has branches all over the east coast, from New England down to Florida. Because bills are paid from the checking account and we transfer just enough from saving account, we asked the bank to make it maintenance and interest free. Because of this, the bank doesn’t charge us the $6.95 now that they used to.

    By the end of the month, after paying bills, not enough amount stays in the account so we waved off interest. However, we have to have a minimum of $100 in our checking account and we’re extremely careful to have the minimum everyday of the month.

    Whenever I receive a bill, the same evening, I log in and schedule payment 5 days before the due date. That’s what the bank advises to do. They prefer at least 5 days. I pay all bills online including credit cards.

    If the recipient does not accept online payment, then the bank issues a check to the company – just an ordinary check – and sends it to them via surface mail all for free. For the vendor, it acts like a certified check because the bank debits our checking account before it sends out the check.

  3. Automate Investing to grow money

    When we are done with our initial saving and bill payment, then we can use the leftover as our investment money. You can set up with your bank and they will automatically transfer the money every month to your investment company. We use Fidelity Investment. Dollar cost averaging – a key to success when investing – is one method you can use [for us it has proven to be extremely good method].

    You can invest to create assets for now and future especially for your retirement. 401(k) plan first comes to mind. Try to contribute, at least, as much as possible to receive any matching your company will give you. Your company’s matching is free money for your investment. If you can spare extra, then you can either add to IRA or more to 401(k). Both are relatively easy to setup. Talk to your HR rep.

In a Nutshell
The automation in the said three areas will simplify your finances, possibly save you money as well as investing to grow it.

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