How To Automate Your Finances So You Only Have To Budget Once A Month
Updated On May 12, 2020
Learning how to automate your finances will save you so much time, money, and stress throughout your life
But, budgeting can be the worst, so people tend to avoid it. (Two-thirds of Americans to be exact!)
Here’s the deal, though:
Not budgeting is a huge, huge mistake.
Because, if there is one thing that you should keep organized in your life, it is your money.
So, why do so many people avoid budgeting their hard-earned cash?
- budgeting is can be time-consuming
- budgeting is can be stressful
See, money is often the cause of stress, tension, and arguments between partners. And, money controls most aspects of our lives, leaving us feeling like we often do not have enough.
So, why even bother with it all, right?
Wrong, wrong, wrong.
You 100% need a budget, regardless of how ‘little’ or ‘big’ your income is.
Because, here’s the deal:
Without a proper budget, you will never, (and I mean never,) feel satisfied with your income and standard of living.
I know this because this was my reality for a long time – that is until I learned how to automate my finances!
Let me show you how:
1. HOW TO AUTOMATE FINANCES
To automate your finances, we’ll be following these steps:
- Determine Your Why Factor
- Collect Your Financial Information
- Calculate Your Income & Expenses
- Cut Costs (if necessary)
- Automate Your Budget
- Track Your Budget
At the end of this post, you’ll have a firm understanding of why you personally want to start budgeting; a factor that is so important to your budgeting success.
And, you’ll have put your budget on autopilot so you can rest assured that your bills will be paid and you’ll have extra money for debt repayment, saving, and personal spending.
Oh, and it gets better:
I’ve created a downloadable PDF checklist and monthly budgeting template for you. Simply sign up below to download it!
HOW TO CREATE AN AUTOMATED BUDGET
An automated budgeting method is perfect for everybody.
That sounds like a stretch, I know.
But, hear me out:
Whether you live paycheck to paycheck, have tons of extra cash, or are somewhere in between, you can benefit from learning to automate your finances.
If you are stressed out about money (aren’t we all?) automating your finances will alleviate that stress because it leaves no room for error.
As I said, an automated budgeting method will help you:
- pay your bills on time
- budget money for debt repayment
- free up money for savings
moneyfor personal spending
If this sounds like the best possible thing for your finances, an automated budgeting method is right for you!
STEP 1: DETERMINE YOUR WHY FACTOR
We’ve already established this:
Every single person needs a budget if they want to be financially successful.
This will be different for everybody, and you can determine your why factor by asking yourself these questions:
- What will budgeting help me do?
- How will budgeting make my life simpler?
You might want to start budgeting to stop living paycheck to paycheck, to pay off debt, or to save more money.
So, once you establish the reason you want to start budgeting, I urge you to write it down!
Because writing it down makes it real and it reminds you of why you started in the first place (if/when budgeting gets tough).
STEP 2: COLLECT YOUR FINANCIAL INFORMATION
Want to know the best part about this step:
It’s hella simple and shouldn’t take you much time at all.
You’re simply going to gather up your financial information. (i.e., pay stubs and bills)
- a months worth of pay stubs (and your partners, if applicable)
- all of the bills that you currently pay
- bank account information
And that’s all!
STEP 3: CALCULATE YOUR INCOME + EXPENSES
> YOUR INCOME
First things first, let’s determine how much money you have to budget each month (i.e., your income).
Using the information you gathered during step two, calculate your total monthly income (after taxes) from all sources.
Once you know exactly how much money you earn each month, you can begin to strategically budget your money on your expenses, debt repayment, savings, and spending.
For the purposes of this post, let’s pretend your total monthly income is $4,500.
(Income + Financial Evaluation Template available in the Budget Boss Binder)
> YOUR EXPENSES
Next, you’ll want to calculate your total monthly expenses.
To create your automated budget, break your expenses down into two categories:
1. Fixed Expenses
2. Variable Expenses
Fixed expenses are bills that you are required to pay monthly, such as rent/mortgage, utilities, cell phone, credit cards, insurance, etc.
Variable expenses are those that vary in cost each month and could be decreased or eliminated if needed. These expenses include things like groceries, transportation, entertainment, and more.
If you aren’t sure what your monthly variable expenses are, begin tracking your spending in a financial planner to calculate an average at the end of the month.
For the purposes of this post, let’s pretend your total monthly expenses are $3,700.
(Monthly Expenses Template available in the Budget Boss Planner)
STEP 4: CUT COSTS
Once you’ve calculated your monthly income and expenses, you can quickly decipher if you’re living within or above your means.
To do this, simply subtract your total expenses from your total income.
If the number is a positive number:
You’re in the green and should be able to afford your lifestyle with ease each month. If you’re struggling to pay your bills, it is because you aren’t currently budgeting correctly.
If the number you calculated is a negative number:
You’re in the red and cannot afford your current lifestyle, meaning you will have to decrease your expenses if you want to stop living paycheck to paycheck.
To decrease your expenses (whether you’re in the green or the red), use these tips:
1. Use BillBargain
This is a fantastic resource that will help you lower your monthly expenses. BillBargain has successfully negotiated over 85% of the bills they receive for cell phone bills, Wi-Fi, cable, and more. The best part? BillBargain is 100% risk-free. If they don’t successfully negotiate a lower price for your bills, you don’t owe them a dime.
2. Pay Off Your Debt
Credit card debt will suck you dry every month if you don’t work hard now to pay off what you owe. I highly recommend consolidating your credit card debt into a low-interest personal loan to save tons of money and pay off your debt in half the time. (Doing this helped me pay off $15,000 in debt in only 12 months!)
3. Sign Up For Trim
Referred to as a financial health service, Trim securely connects to your bank account(s) to analyze spending, subscriptions, and recurring bill pay. Then, Trim will help you cancel unused subscriptions, negotiate lower bill prices, and more. In the last month alone, they’ve helped their users save over $1,000,000!!
Who knew saving tons of money could be so simple?
Furthermore, who knew you were missing tons of opportunities to save money while buying the things you already do?
STEP 5: AUTOMATE YOUR FINANCES
Let’s recap really quickly:
- You calculated your total monthly income. For purposes of example, that number is $4,500.
- You calculated your total monthly expenses (including fixed and variable). For example purposes, this total is $3,700 ($2,970 fixed, $730 variable).
- Based on these numbers, you can calculate your remaining monthly money (if any). For example purposes, there are 800 spare dollars.
You are going to automate your finances using percentages, however, you will be using customized percentages instead of pre-determined percentages such as the ones found in the 50/30/20 budget system.
Follow these steps to start your budget:
1. Divide your total monthly fixed expenses by your total monthly income to get a percentage for your fixed expenses.
2. Divide your total monthly variable expenses by your total monthly income to get a percentage for your variable expenses.
3. Divide your remaining money by your total monthly income to get a percentage that will be divvied among debt repayment, savings, and personal spending.
- Fixed Expenses Percentage – $2970 divided by $4500 = 66%
- Variable Expenses Percentage – $730 divided by $4500 = 16%
- Remaining Percentage – $800 divided by $4500 = 18%
Here’s the deal:
Once you have a percentage for each category of your budget, you can directly deposit that amount into specified bank accounts so you always (and I mean always) have enough money for your bills, variable spending, debt repayment, savings, personal spending, and more.
Follow these steps to officially automate your finances:
– Fixed Expenses
– Variable Expenses
– Debt Repayment
– Personal Spending
2. Set up direct deposit with the percentages you just calculated for each of your bank accounts:
(a) Fixed expenses bank account = 66%
(b) Variable spending bank account = 16%
(c) Remaining = 18%
– Debt Repayment account = 8%
– Savings account = 5%
– Personal Spending account = 5%
3. Set up automatic bill pay for your fixed expenses so they will automatically be withdrawn from your fixed expenses bank account. This account should (if you’ve kept to your budget) ALWAYS have the exact amount of money in it to cover your expenses. (You’ll also avoid missing due dates and paying late fees.)
And, once this is complete, you’ve automated your budget!
STEP 6: TRACKING YOUR BUDGET
Most people forget this crucial part of budgeting and end up wondering why their budget failed a month after implementing it.
If you have a budget, then you need to track it.
Because, here’s the deal:
If you do not track your budget, you cannot make sure that you are sticking to your budget. And, if you aren’t making sure that you’re sticking to your budget, your budget will fail.
You’ve just created an automated budget for your money and thus should have enough money in your fixed expenses account for all of your bills.
BUT, you forgot that this month your car insurance premium needs to be renewed and you’ll owe $100 more than usual.
Since you haven’t been tracking your budget, you do not realize this and thus your fixed expenses bank account is overdrafted.
Merp. Not good.
Here’s the kicker:
If you were tracking your budget, you would have caught this budgeting error in advance, transferred $100 from savings into your fixed expenses account to cover the difference and never overdrafted your account.
So, you might be wondering: How do you track your budget?
The Budget Boss Binder – $9 ($19 value)
A printable and digital budgeting planner designed to help you create & stick to a budget, pay off debt, save money, and more. The Budget Boss Planner is un-dated so you only have to purchase once to use this planner forever.
Automating my finances with the automated budgeting method was the best thing that ever happened to my family finances.
I was no longer living paycheck to paycheck, able to pay off thousands of dollars in debt and save more money than ever before.
I know. These are high claims for a simple budgeting method.
But, it’s true.
And, I want the same things for you.
So, take action:
Gather your financial information, implement an automated budgeting method, and track your budget for success.
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