How would your finances improve if you could automate your budget? Budgeting is a continuous process that not everyone has the patience for or enjoys. There are options to reduce the amount of time you spend budgeting or tracking your expenses each month.
These methods allow you to automate your budget creating more room to worry about the things you enjoy doing.
Create an annual budget plan
If you’re the type of person that likes to plan ahead and doesn’t like to spend energy and time creating a new budget each month you could consider creating an annual budget.
Creating an annual budget requires you to foreshadow your future expenses and input them into a yearly tracker. Looking back at the last 3-6 months of your pay can help determine your average income. You can also review your transactions to evaluate total expenses which is helpful when preparing a monthly budget and predicting future cash flow.
Once you review your expenses you will need to forecast your future months.
Forecasting future months
Forecasting your future month’s expenses requires considering all non-reoccurring expenses. You will likely have future expenses that aren’t your day-to-day norm. These expenses include quarterly, bi-annual and annual bills such as auto insurance and discretionary expenses such as birthdays, holidays, and vacations.
These expenses can creep up and throw finances off, making you resort to alternative solutions such as credit cards to pay for them. By including these expenses into your annual budget, you create room for preparation and planning for how to save or pay for the expense.
Once you have your average expenses and non-reoccurring expenses outlined you can include these costs into your annual budget.
Automate savings and debt payments.
Saving money is something most people struggle to do. In fact, it is often an afterthought of not only the budgeting process but in many people’s personal finances. Automating your finances can help you allocate savings without much thought and effort, allowing you to make savings a consistent priority.
Automating savings
Once you have determined your savings amount, you can immediately auto-direct that amount from your checking to your savings on the days your paycheck hits your checking account. Most banks allow you to set up regular deposits or transfers into your savings account so you can save money before spending it.
Another option you can consider is setting up direct deposits to your savings and investment accounts through your employer. Most employers allow you to split your paycheck so a portion goes directly into your savings account, making automating your finances much easier.
Automating debt and bills
Another way to save time and effort for your budget and finances is to automate all of your debt and bill payments. Utilities, debt payments, memberships, subscriptions, and more – can be automated, eliminate worrying over whether you paid a bill or not.
Automating payments through your service provider
Automating your payments allows your creditor or service provider to automatically deduct their payment from your bank account. They will deduct the set amount according to the payment schedule you have with them.
For some bills, such as your student loan debt payments there’s often a financial incentive for automatic payments. To get more on-time payments and people to enroll, they sometimes offer a discount on the loan’s interest rate saving you money in the end. Check with each of your service providers to see if they have an automatic payment service.
Set up automatic bill pay through your bank.
Another option to automate your expenses is by automating your bill pay through your bank. With this method, you will give your bank your account information for each creditor, and your bank will automatically issue the payment to your service providers on the accounts you designate.
You choose the amount to pay and the date the payment is made. That way, you know when to expect that specific amount to be withdrawn from your account. If you’re using a checking account to make the payments, you should be able to set up an alert before the date the payment is supposed to go through allowing you to be prepared for the upcoming expense.
Link your budget amounts to your bank account for tracking.
Once you have gone through the correct budgeting process and have been able to determine your budget category amounts you can leverage your bank account app to help you track your expenses. Many banks now offer budgeting tools to help you input your budget amounts and track your expenses. These apps auto-assign expenses to these categories saving you time from personally tracking and calculating each and every expense.
Budgeting apps help you to gauge your expenses, but they are not always the most accurate. An example of this is you may not consider a certain store to be a grocery store, but the app may categorize it as such making your expenses incorrect.
A good rule of thumb to address this error is to still review the expenses within your budgeting app and adjust as needed.
I’d love to hear from you! How have you managed to automate your budget?
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