Automate as much of your finances as possible. One of the main contributors to financial success is having an automated system in place that was engineered specifically for your personal goals. An automated system saves time, reduces human errors, and builds habits. All of these benefits compound over time to accumulate success.
Automation is critical to success.
To build this automated system, you need to complete a couple of steps and exercises. Here is the summarized list to consider.
- Build a budget based on your take-home income, and understand cash flow (i.e., how much cash is coming in and going out). See here.
- Set up direct pay for recurring expenses, including monthly bills, subscriptions, and credit card payments.
- Set up routine contribution to a savings account, an emergency fund, a retirement account, and an investment account, as appropriate
- Review all accounts and transactions routinely and make improvements to the systems as needed. For example, you need to make sure the accounts make sufficient cash for automated bills. You may also need to adjust the system based on unexpected expenses.
There are technologies, apps, and services that banks and other companies provide to make all the above steps easy. There’s no excuse not to automate.
Visually, the system may look something like this:
It’s critical to check in on the system regularly to review how it’s doing. It would be best if you made sure the system is working as intended. If it isn’t, you should identify and make the necessary adjustments. If it is working, you should think about how to make it work even better. This virtuous cycle of improvements helps strengthen the automated system to generate incremental success over time.
To sum it all up, let’s automate, automate, and automate.