An automated budgeting method will save you so much time, money, and stress throughout your life
Budgeting gets a bad wrap, so people tend to avoid it. (Two-thirds of Americans to be exact! 😳)
Here’s the deal, though:
Not budgeting your money is a big, huge, colossal mistake.
If there is one thing – and one thing only – that you should keep organized in your life, it should be your money. If you don’t take control of your money, your money will take control of you.
You see, regardless of how ‘big’ or ‘little’ your income is, you need a budget so you can increase your financial wellbeing, pay your bills on time and with ease, get out of debt, and so much more.
This might sound dramatic, but:
Without a budget, you will never feel satisfied with your income and standard of living.
I know this because this was my reality for a long time until I learned how to automate my finances and I can’t wait to show you how to do the same!
How To Automate Your Finances:
Throughout this post, I’ll cover everything you need to know to set up your automated budgeting method!
Here’s a quick overview of what we’ll be covering:
- 1. Determine Your Why Factor
- 2. Collect Your Financial Information
- 3. Calculate Your Income & Expenses
- 4. Cut Costs
- 5. Setting Up An Automated Budgeting Method
- 6. Tracking Your Budget
At the end of this guide, your finances will be on autopilot so you never miss a bill payment and you’ll have extra money for debt repayment, savings, and personal spending.
I’ve also created a downloadable checklist and monthly budgeting template for you. Simply sign up below to download it! 😊
Who Is an automated Budgeting method good For?
An automated budgeting method is a good option for almost everybody.
Whether you live paycheck to paycheck, have tons of extra cash, or are somewhere in between, you can benefit from automating your finances.
An automated budget leaves no room for error, so money stress will become a thing of the past!
An automated budgeting method is awesome because it will:
- • ensure your bills are paid on time
- • help you intentionally set aside money for debt repayment
- • free up money for savings and investing
- • leave you with money for personal spending
I know this sounds like the best possible thing for your finances, so let’s dive in and set up your automated budget!
1. Determine your why
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:
- 1. What will budgeting help me do?
- 2. 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.
Knowing your why is essential because it creates meaning for your purpose. Without it, you’d have no motivation to continue budgeting.
Once you establish the reason you want to start budgeting, I urge you to write it down in your budget binder to use as a reminder if you feel like giving up.
2. collect your financial information
This step is hella simple and shouldn’t take you much time at all.
You’re simply going to gather up your financial information such as pay stubs, bills, and grocery receipts.
- • a months worth of pay stubs from all income sources
- • a list of the bills you pay and for how much
- • current bank account information
- • monthly grocery and transportation receipts – if you have them
Once you have this information gathered, you’ll be able to easily create an overview of your financial wellbeing.
3. Calculate your income and expenses
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 our total monthly income is $5,000 – as you can see in the example above!
Next, you’re going to calculate your total monthly expenses.
For the purposed of an automated budgeting method, break your expenses into two categories:
- 1. Fixed Expenses
- 2. Variable Expenses
Fixed expenses are bills that you pay on the same day each month and for the same amount. Bills such as your rent/mortgage, utilities, cell phone, credit card minimums, insurance, etc.
Variable expenses are the costs that vary each month and come up sporadically, such as groceries, transportation, household needs, etc.
For the purposes of this post, let’s pretend your total monthly expenses are $3,450. Your fixed expenses total $2570 and your variable expenses total $880.
4. Decrease your expenses
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 budgeting correctly!!! (But we’re gonna fix that soon!)
If the number you calculated is a negative number:
You’re in the red and cannot afford your current lifestyle. You need to follow the steps below to decrease your expenses so you can stop living paycheck to paycheck.
Whether or not you’re in the green or in the red, you need to take the time to decrease your expenses.
I know, folks in the green are wondering, “why should I decrease my expenses?”
Well, more money in your pocket is always, unanimously a good idea, right?
To decrease your expenses, follow these 3 steps:
- 1. Take out your list of expenses and mark each one with a star that you think you could eliminate or decrease.
- For instance, could you find a company that offers internet at a lower cost? Are you overpaying for car insurance? Maybe you could refinance your mortgage or student loans for lower interest rates. Could you carpool and decrease your transportation costs? Are you spending waaayy too much money on coffee at Starbucks each month?
- You get the point! Do the research and you’ll be ah-freaking-mazed at how much money you could be saving.
- 2. Sign Up For Truebill
- When you sign up for Truebill, they’ll securely connect to your bank account(s) to analyze your spending, subscriptions, and recurring bill pay. Then, Truebill will work its magic by helping you cancel unused subscriptions, negotiate lower bill prices, and improve your credit score. In the last five years alone, Truebill has helped its users save over ONE HUNDRED MILLION DOLLARS!
- You can sign up for Truebill here and be saving money in minutes!
- 3. Pay Off Your Debt
- Credit card debt, car loans, and student loans will suck you dry every month if you don’t work hard now to pay off what you owe. My two best recommendations for paying off debt quickly are to consolidate your debt into a low-interest personal loan or use the debt snowball method to pay off your debt.
- Doing this will save you hundreds – if not thousands – of dollars over the course of your life.
5. set up your automated budget
We’ve gone over a lot of info so far, so let’s recap really quickly:
- • You calculated your total monthly income
- • You calculated your total monthly expenses and broke those expenses into fixed or variable categories
- • You decreased your expenses and came up with a new, lower monthly expense total
Now you have all the information you need to set up your automated budget.
By using customized percentages and multiple bank accounts, you will be able to put your finances on autopilot so you never miss a bill, can pay off debt, and start growing your savings.
These are the steps to follow to set up an automated budgeting method:
- 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. Subtract your total monthly income by your total monthly expenses to see how much extra money you have available each month
- 4. Divide your extra money by your total monthly income to get a percentage that will be divvied among debt repayment, savings, and personal spending
- 1. Fixed Expenses Percentage: $2570 divided by $5000 = 51%
- 2.Variable Expenses Percentage: $880 divided by $5000 = 18%
- 3. Extra Money: $5000 – $3450 = $1550
- 4. Extra Money Percentage: $1550 divided by $5000 = 31%
Now its time to take your math and automate your budget:
Once you have a percentage for each category of your budget, you can direct deposit that amount into specified bank accounts each pay cycle. This ensures that you always (and I mean always) have enough money for your bills, variable spending (groceries, etc.), debt repayment, savings, personal spending, and more.
So, follow these steps to finalize the automation of your finances:
- 1. Assign or open bank accounts for your:
- • Fixed Expenses
- • Variable Expenses
- • Debt Repayment
- • Savings
- • Personal Spending
- 2. Set up direct deposit using the percentages you calculated for each of your bank accounts:
- • Fixed expenses bank account receives 51% of each pay check
- • Variable expenses bank account receives 18% of each pay check
- • Extra money = 31% which can be split among other bank accounts, such as:
- • Debt repayment account receives 11% of each pay check
- • Savings account receives 10% of each pay check
- • Personal spending account receives 10% of each pay check
- 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 to cover your fixed expenses.
- By setting up automatic bill pay withdrawals, you’ll also avoid missing due dates and paying late fees.
And now, drum roll please…..
You’ve now set up an automated budget for your finances! Go you!! I can’t wait for you to see and feel the difference your hard work will make!
6. tracking your budget
Here’s the deal:
Most people forget the most important part of budgeting and then wonder why their budget failed a month after implementing it.
Tracking your budget is the most important part of budgeting. If you have a budget, then you need to track it.
Because let’s be real:
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.
Let’s look as a real-life example:
You’ve just created an automated budget for your money and therefore should have enough money in your fixed expenses account for all of your monthly bills.
BUT, you forgot that this month your car insurance premium needs to be renewed and you’ll owe $100 more than usual.
Then, since you haven’t been tracking your budget, you do not realize this and your fixed expenses bank account is over-drafted.
Ugh! Not good!
And, 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?!
We developed the Budget Boss Binder™ to track any and all budgets, debt repayment, savings goals, bill payments, and more.
The Budget Boss Binder™ is a printable and digital budgeting planner designed to help you stick to your budget, pay off debt, save money, and create an abundant life. The templates included are un-dated so you only have to purchase once to use this them forever.
Because you’re a valued reader of Who Says What, we’re offering our best selling Budget Boss Binder™ to you for 50% off when you click the button below!
Skipped to the end? READ ME!
Ok, so I know this was a loonngg post. So I get it if you skipped to the end.
I’m gonna be honest with you though:
You cannot set up a successful budget by skimming this post. There’s just too many little details that you’d miss.
But, I will throw you a bone:
When you sign up for our free mini Budget Boss™ eCourse, you’ll receive a paced version of this post over the course of 5 days. You’ll also unlock access to our free resource library which contains the automated budgeting method checklist and template!
I will walk you through each step with mini homework assignments so that setting up a budget isn’t so overwhelming.
Simply use the form below to register for your free Budget Boss™ eCourse today!
Automating my finances with the automated budgeting method was the best thing that ever happened to my finances.
It helped me to stop living paycheck to paycheck, pay off thousands of dollars in debt, and explode my savings account.
I want these same things to be true for you, so:
TAKE ACTION TODAY!
Gather your financial information, implement an automated budgeting method, and track your budget for success.