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Saving Money by Automating Your Finances

We’d all like to save more money, but it often seems too difficult. Bills need to be paid, groceries need to be purchased, and rent and mortgage costs continue to go up in many areas of the country. After you’ve paid all of your expenses, there likely isn’t much left over. However, that doesn’t mean there aren’t ways to save money.

Automating your finances isn’t just convenient, it can also help you save. Here’s how, along with some tips to help you out.

Automate Bill Payments

Missing a bill payment can be costly. Not only will it likely mean you’ll pay interest charges or penalties, but frequently missing payments can damage your credit rating, which means you’ll pay more to borrow money in the future.

Credit cards, phone bills, mortgage payments, and many other payments can easily be automated. Depending on the creditor, you could set up automated payments through them by using their website or sending them a void cheque. You can likely also set up automated or recurring payments through your bank.

Not only will automating bill payments save you money and time, but it will reduce your stress as well. Once it’s set up, you’ll never have to worry about whether or not you paid a bill.

Automate Savings

One of the best ways to save money is to automate it. Eventually, you’ll forget about it all together and you’ll save money each month without thinking.

Putting money aside regularly is tough, but it’s a great way to save. However, most of the time, people either forget to move money into a separate savings account or they spend everything in their chequing account since it’s there and available to them. Automation solves these problems. Talk to your bank and set it up so that a certain amount of money is moved from your main account to a specific savings account each month. Since this money moves automatically, you likely won’t even notice that it was there.

Another way to automate savings is to speak with your employer and see if the payroll system they use can deposit a certain amount into a different account each paycheque. If you can work this out, the money will never actually enter your main account, so you won’t be tempted to spend it. This sort of effortless, automatic savings is the perfect way to build up an emergency fund.

Automate Investing

It’s a good idea to put some money aside each month into a savings account. This can help you in the event of an emergency, a job loss, or another unexpected situation. It can also help you afford things like vacations and large purchases. However, if you want to put money aside for retirement, an education for your children, or any other long-term goal, it’s a good idea to invest your money.

While some people try to time the market and make frequent trades to increase their profits, it’s much easier (and often much more effective) to have some of your money invested automatically each month.

Many employers give their staff an option of having a percentage of their pay placed into a retirement savings account each month. Some even match contributions up to a certain amount. If your employer offers this option, consider taking advantage of it as it’s a great way to build up a retirement fund.

How Automation Saves

Over time, automation saves you money in several ways. As mentioned, it helps you avoid interest and penalty charges. However, taking money out of your account each month and putting it into a savings account or investment account doesn’t just help you save, it also reduces the amount of money you have to spend each month. This means you’ll be forced to control your spending. Over time, the money you’ve placed into savings builds up, leaving you in a better financial position.

How Automation Can Cost You

Not all automation is good automation, however. For instance, if you have money automatically coming out of your account each month for your cable bill, a streaming service, a gym membership, or any other expense, you could forget about the service and wind up paying for something even if you don’t use it. That’s why it’s important to review your automated payments every so often to make sure they still make sense for you.