There are plenty of things in life you learn to do automatically, whether it’s checking your blind spot before changing lanes or always washing your hands before you eat. Automating finances can not only be a smart money move, it could also help alleviate some of the stress surrounding payment deadlines.
Some benefits of finance automation include helping avoid late fees and sticking to your monthly budget. Figuring out where to start when it comes to how (or whether) to automate personal finances might seem like a lot of work up front, but if it can help with setting up financial success, it might be worth automating.
Automatic Deposits and Transfers
One way to automate personal finances is to set up a direct deposit into a checking, savings, or cash management account, like SoFi Money®. Using direct deposit at a job, for example, means paychecks are automatically placed into a chosen account every pay cycle.
When an employee starts a new job, an employer might hand out paperwork explaining how to set up a direct deposit. If an employee hasn’t set up direct deposit already and wants to, they could ask the HR department for the form to request it.
A regular paycheck automatically deposited on a certain day—whether payday is weekly or semi-monthly—could be a great step to helping manage finances. It provides a reliable date when money will hit a bank account, rather than depositing a paper check and waiting for it to clear.
Beyond direct deposit, an automatic transfer from a checking account to a savings account is an option. If it’s difficult to remember to put money away in savings, or harder still to part with that money once it’s in an account, an automatic deposit of a set amount into savings might make it easier to save, since it wouldn’t be necessary to hit the transfer button every time.
Connect your direct deposit with SoFi
Money to help automate your finances.
According to the National Foundation for Credit Counseling , a quarter of Americans have trouble paying their bills on time. Putting bills on autopay is one step that might help with confidence about finances, knowing that as long as the money in an account, bills will get paid on time.
This could be a great way to avoid the stress of worrying whether utilities or phone bills were paid this month, and can be an eco-friendly option by reducing the number of paper bills mailed out.
Automating bills might help prevent late fees in the short term, but it could also be one way to help keep a credit score from getting damaged from missed payments on certain bills. In fact, payment history affects 35% of a FICO® Score.
Plus, some entities, such as federal student loan servicers, may offer a discount for setting up automatic payments . For bills that can’t be set on autopay, recurring calendar alerts can serve as a reminder to have the money ready.
And while it’s not a recurring automatic transfer, balance transfer credit card offers could be an option that might allow shifting a credit card balance to a new credit card with 0% interest for a set period of time.
This could help avoid higher rates and pay off a balance quicker, since interest isn’t charged initially. If a balance does carry over on a credit card from month to month, automatic bill pay with a financial institution could be set up for payments over the minimum required amount.
Contributing to Retirement
Another auto payment to consider setting up could be for your retirement fund. If an employee signs up to contribute to a 401(k), an employer might automatically deduct the money from the employee’s paycheck and transfer it into a retirement savings account chosen by the company.
Many employers may match contributions to their employee’s retirement accounts. If your employer matches contributions, then maxing out an employer match could potentially double the amount of your contributed to a retirement contributions.
While most wealth management accounts tied to a company deduct from an employee’s wages, there are other account options. Automatic investments could be scheduled or recurring transfers between a bank account and a separate retirement account, like a online Roth IRA, could be set up.
One other place where automation could be set up when it comes to finances is an emergency fund. The conventional wisdom is to build up this fund to meet about three to six months of basic living expenses for those “just in case” moments.
Setting up a recurring transfer to an emergency fund could help minimize worry about putting money away for situations like a surprise medical bill or car trouble.
A cash management account could also help make automatic transfers simple, whether for savings, an emergency fund, or bill payments. In a cash management account, the money has a chance to grow and can still be withdrawn when needed.
Enter SoFi Money®, a cash management account for spending, saving, and earning, all in one product. And bill payments can be set up directly through the SoFi app.
Plus, with SoFi Money’s new vault feature, an account holder can separate funds into different vaults within an overall account. That way there’s a separate place to store an emergency fund or a travel fund and have direct deposit set up to place the funds in that specific vault.
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.