How to nurture healthy financial habits with simple automation tactics
Are you an emotional spender? Discover how automation can help you make healthier financial decisions.
Our finances tend to be emotionally charged (no pun intended).
We see these emotions play out with the purchase of a new home that is over budget but just “feels so right.” Or, new parents who go all-out spending on baby gear to ensure their little one has the best possible products, even if a 6-month-old can't tell the difference between a $99 toy chest and a $999 one.
We know that many of our money decisions are not rational. So, how do we eliminate some of the emotions to make healthier financial decisions?
Budgeting, saving and investing don't have to be complicated. The easiest thing you can do when it comes to your money is “set it and forget it.” By automating your finances, you can remove nearly all of the management, willpower and emotional baggage that accompany money decisions.
Here's a simple introduction on how to get started.
What’s financial automation?
It's really quite easy. Financial automation means putting a system in place that will help you make logical, unemotional decisions automatically. This can be accomplished through the use of many helpful apps and digital technologies.
Let's dig into some of the ways you can begin to automate your finances.
How to automate your paycheque
A simple step you can take to automate your finances is to transition from a paper paycheque to direct deposit. Rather than waiting for a paper cheque in the mail, the money is automatically transferred into your account. The convenience of direct deposit goes beyond your paycheque. You can also use it to receive payments from your health benefits or for your tax refund.
Mobile cheque deposit
91% of respondents think digital technologies have made banking a lot more convenient, according to Simplii's study, Digital Trends in Canada. Mobile cheque deposit is one such technology. If you receive a paper cheque, you can deposit it from your mobile banking app from just about anywhere, no branch or ATM needed.
How to automate your budget
If you've never made a budget because it seems too time-consuming, well, you might be out of excuses.
You can quickly build a budget, track spending and start achieving your financial goals with apps like You Need A Budget (YNAB) Opens a new window in your browser.. What makes these types of apps so useful is that they simplify budgeting and promote money awareness. By providing a consolidated view of your finances, you can keep track of where all of your cash is going.
This is a popular, fee-based app that will help you design a personalized budget and track your expenses. The YNAB app helps take some of the emotion out of your financial decisions by helping you prioritize how you’ll spend your money up front. By planning ahead, you can prevent some of those spur-of-the-moment purchases.
How to automate your savings and investments
If you have good intentions to save or invest, but month after month, you struggle to put anything aside, don't fret. There's a lot you can do to automate your savings and investments and form healthy financial habits.
If you’d rather save on autopilot, check out Mylo Opens a new window in your browser.. This is a Canadian investing app that rounds up all of your purchases to the nearest dollar and then invests the difference. For instance, if you buy a latte for $5.25, Mylo will round up your purchase to $6.00 and invest the extra $0.75 at your current financial institution.
How to automate your bill payments
In this day and age, there's no reason for you to write a paper cheque to pay your bills (unless that's what you're into). There are several methods you can use to automate physical bills and ensure you never miss another payment or receive another late fee.
Automate with credit
Most major credit cards allow you to set up pre-authorized bill payments that are charged to your card on specific dates.
You can easily schedule automatic bill payments through your bank or with a banking app that's already on your phone. All you have to do is choose when you'd like the payments to come out, and the money will automatically be transferred from your chequing account.
How automation can help you find more peace of mind
Through the process of automating your finances, you're giving yourself the opportunity to make logical financial decisions for Future You. You're also using technology to form healthier money habits.
Here are a few additional ways that automation can help you find more peace of mind.
The Simplii Digital Trends report asked Canadians why they use digital tools or services. Of those surveyed, 43% said, “to simplify my life.” Automation can help you keep things simple by reducing the number of money decisions you have to make in a day, week or month.
Time savings is the second most popular motivating factor for why Canadians choose digital technologies. In fact, 78% of Canadians surveyed in the Simplii Digital Trends report said that online tools or services have saved them time.
There's no longer a reason for you to feel stressed at the end of the month when you think about your finances and wonder, “Where did all my money go?” With the help of digital apps and technologies, you can account for every dollar that you've spent and begin to save, invest and pay off debt with intention.
Reduce your effort
For an up-front cost of just an hour or 2, you can create an automated system that'll help you achieve your short- and long-term financial goals. It's really that easy.
By automating your spending and your savings, you can eliminate many of the obstacles and emotions that prevent you from achieving your financial goals. So, go ahead: jump on the digital bandwagon and automate your finances so you can start spending more time doing the things you enjoy.