Automated Money Strategy – Made Simple
Automated Money Strategy: money can be a difficult subject to discuss but at its core essence it’s easy to manage. Surprise! It is not as difficult as we pretend it is. Now this does not mean that we are not faced with financial intricacies that are far above our basic comprehension. Let’s not forget that top bankers were selling derivatives (a type of financial product). Of which they had no clue how they worked. But the point of this post is to discuss simple tricks and tips to make saving, investing and growing rich simple.
Automated Money Strategy Made Simple
One of the conversations I recently had with my son was about what to do with your dollar. It was a simple breakdown of what you should do with every dollar that you earned, was gifted or came into your possession. Seeing as I have been spending my summer reading several money managing and money making books I am going to continue on the subject of money.
Here is a simple way to manage your money. Don’t laugh! I know that you know what you are doing. But for some of us money is a very tricky subject. Like I mentioned in my post Money and Food the similarities – it’s more about your mentality (how you think) rather than what you know or how much you make.
In this post I will briefly speak on using a simple automated money strategy to help improve your financial life. Most of these ideas come from the books I’ve read this summer. I particularly like the book I Will Teach You To Be Rich by Ramit Sethi. I haven’t finish reading the book yet but it is interesting and informative.
Start Your Automated Money Strategy
In what to do with your dollar I spoke about breaking up your dollar (this means your total sum of money you earn) into five parts. Read the post for the reasons for breakdown. See link below.
Charity – 10%
Savings – 10%
Investments – 10%
Emergency fund – 10%
Daily living – 60%
The difficulty of managing money is that it is so darn easy to forget to do what you have planned to do. Most people do not think about saving money until the end of the month. Which is usually too late to try and save money. Why? Because you normally have nothing left at the end of the month. So how do you save when it is so easy to overlook? Do like the government does. The government takes out its money, taxes and all its deductions before you even get paid. So why not do the same.
With today’s technological advances you can link all your accounts together. You can then have the bank automatically distribute your prescribed amounts to savings, investments, retirements and etc. This is relatively easy to accomplish and any bank assistant will help you to do this. I would assume the most difficult thing about creating this automated money strategy is in finding the time and opening an account that doesn’t nickel and dime you to death.
So for times sake I will break it down into bullet points.
Automated Money Strategy – Made Simple
- Open relative accounts. Checking account, savings account, an IRA or retirement account and so forth.
- Link accounts to each other so you can transfer money.
- Create automated disbursements (payouts). For example if you want to save monthly or every time you get paid, you create a corresponding automated payout.
ie. Every pay day $10.00 goes into saving account (never to be touched) and $10.00 goes to my IRA and so forth.
- For bills that are not fixed, that change month to month you simply pay manually. The book makes a suggestion of asking companies to move your pay due date to a specific date (pay all bills at same time).
- Credit Card – this one is a little tricky. The book suggest you use your credit card for everything and at the end of the month pay the entire bill. This can be done by creating notifications so you do not miss due date as well as set up automatic payments. (* you really have to learn to be proficient at this to make sure it works for you – my opinion.)
In short this system automates much of for goals. For instance saving becomes automatic. It is set up to money money from your checking (where payroll or income) is deposited directly to your savings account, retirement account and so forth. This means you will never spend more than you earn and forget to save. I think it’s a cool Idea and have already implement the idea on my account.
You may have to read the book if you want full details and get all the nuances involved in making everything work. The credit card part is a bit trick, it all depends on how diligent you are and how well you handle credit.
Check these links:
Blog Post: What To Do With Your Dollar
Blog Post: Dad How Do I Become Rich – Oh Boy