How to take back your time and sanity by automating your money

Posted by in Budgeting, Communication, Giving, Investing, Saving, Spending, Tools

A few months ago I was helping a good friend of mine shop for wedding rings. He was marrying another long-time friend of mine and they had the big parts of their wedding handled (venue, date, guest list…) But, they still had some details left to work out, like picking wedding rings.

My friend told me what he was looking for, I told him about my ring, and gave him some other ideas. Then just for fun, I sent him an article about a guy who hand-forged his own wedding ring out of a FREAKING METEORITE!

Evidently, you can buy a meteorite…news to me.

Now, here’s the thing. I was only half-joking when I sent my friend the meteorite ring how-to guide. My friend’s an engineer. My friend’s a nerd (in the best way possible). He has a massive workshop. And most importantly, he likes to do things the hard way just because he can. He is Tim Taylor incarnate (injuries and patient wife included). I was secretly hoping he’d track down his own hunk of meteor and make the wedding ring to rule them all.  

Unfortunately, my friend is also uber busy. While intrigued by the idea of forging his own meteorite ring, his response was as expected. “I’ll get right on that…on that 8th and 9th day of the week I’m about to create.”


I’m busy. You’re busy. We’ve all got things to do and places to be. There’s always something screaming at us requiring action and we’ve only got a finite amount of willpower and attention to go around.

Typically though, I think we do a pretty good job handling big things. The big things tend to shape the flow of our lives and we build routines around them.

Go to work. Put clothes on (maybe not in this order). Eat food.

And if we’re honest, I think we’d find the big things don’t take up too much time. We’re good at them.

Instead, we’re busy dealing with minutiae. It’s the little things pulling us in infinite directions sapping our will-power, tripping us up and stressing us out.

What kind of clothes should I wear? What should I cook and eat for dinner?

I think handling money is pretty similar. There are some big things we probably have a decent grip on and understanding of (especially if you’re the kind of person to read a personal finance site like this one).

Make more, spend less. Kill debt. SAVE, SAVE, SAVE!

Instead it’s the minutiae…all the niggly little details requiring attention that stress us out. Paying all our bills on time, saving enough. Investing regularly and wisely. Budgeting for EVERYTHING.

And while we may pride ourselves on staying on top of things, let’s be honest. It can be exhausting. Then throw in a partner who may not be as enthused about keeping track of every freaking cent we make, spend, or save and the effort required rises exponentially.

Maybe they’ll feel constricted by budgets. Maybe you’ll feel frustrated by their seeming lack of focus and commitment. Over time, this tension can grow and grow until you can’t even think about talking about money without fighting.

Here’s the good news. It doesn’t have to be like this.

Putting our money on auto-pilot

Earlier in our marriage, Andrea and I would spend hours talking about and managing our money. These weren’t fun hours either. They were tense and ended in tears far more often than I’d care to admit.

But over time, we learned how to talk about money without fighting, agree on the big things with our money, and how to make important recurring decisions once. Then, we learned to build a system to manage our money and accomplish whatever we agreed to do…automatically.

No more hours-long money talks. No more tracking every penny (this was tough for me, but liberating for Andrea). No more wondering if we’d pay our bills on time, save enough, or invest well. Our system does it all for us. All we have to do now is spend 10 minutes each month to spot-check our system.

Keep reading and I’ll walk you through our system and tell you everything you’ll need to set one up for yourself.

Ingredients for automating money

In order to build a system to manage your money for you, you’re going to need a few things.

First: a warning.

Bill Gates once famously said, “automation applied to an efficient operation will magnify the efficiency…automation applied to an inefficient operation will magnify the inefficiency.”

In other words, if you don’t already do a good (efficient) job handling your money, building a system to automatically handle your money for you will end poorly. Andrea and I learned this the hard way. We actually bounced a rent-check during an early attempt to automate our finances because we mistimed a deposit. Whoops!

The good news was we figured out what went wrong and fixed it. But if we weren’t organized and didn’t have our solid understanding of our finances, correcting our mistake would’ve been much trickier than it was. (And yes, our “fix” is built into this guide)

So before you continue, make sure you’re organized, know how much you make in a given month, and understand how you and your family spend money. If you’d like some help with this, check out my guides on paying off debt or building an emergency fund. Either one will give you everything you need to get organized and get a grip on your finances.

Second: Direct Deposit

The system we’ve built (and that I’m going to describe to you) works best if you have a fairly standard paycheck showing up in regular intervals. Andrea and I have full time jobs that pay us the same amount every two weeks, so every two weeks we can count on a certain amount of money showing up in our checking account. Going forward, I’ll call this account our Primary Checking Account.

Everything else I’m going to describe ahead works off of the same two week interval. If you get paid weekly or monthly, adjust your system accordingly. The system will still work.

If you don’t get paid on a regular basis, you might not be ready for full automation.

Third: the right kind of bank.

You’ll need a bank that allows you to have multiple checking/savings accounts, pre-schedule recurring transfers between them, and that also comes with an Auto Bill Pay feature.

Since I’m a military veteran, we have access to USAA Federal Savings Bank which comes with all these features at no charge. Most big banks, though, have these features. Check yours to find out. If they don’t, it might be time for a change.

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How we invest towards retirement automatically

Let me just say right off the bat I’m not going super deep into how exactly we’re investing here. Investing deserves it’s own article and I’m sure I’ll write it sooner than later.

But in broad strokes, if you’re ready to save for retirement (if you’re reading this, you’re probably ready) you’ll want to take advantage of tax-advantaged accounts like a 401(k), 403(b), or a Roth account.

Andrea and I currently do all of our retirement savings through retirement accounts offered by our employers. My employer offers a standard 401(k) with a decent match while Andrea’s offers a standard 403(b) without a match. Further, my employer also offers a Roth 401(k).

I save the maximum percentage of my income my employer will match in my 401(k) (meaning when I put in 6% of my paycheck, my employer kicks in another 4.5%). Then Andrea saves the same percentage of her income in her 403(b). We then save the equivalent amount of two maxed-out Roth IRAs from my income in my company’s Roth 401(k) option.

Again, I’m intentionally not getting into great detail here. The point is, we do all of our retirement investing automatically through our employer’s tax-advantaged retirement accounts. This way, when our paychecks show up in our Primary Checking Account, all our retirement investing is done already.

If you don’t have the ability to save for retirement through your employer or simply don’t like the options available, you can invest for retirement through a 3rd party and treat your retirement investing like a regular bill. You’ll see what that looks like soon.

How we pay our bills automatically

There are two types of bills we deal with, regular and irregular.

Regular bills are (you guessed it) regularly occurring. They’re the same amount every time and are due the same time each month. 

Our regular bills include:

  • cell phone bill
  • internet bill
  • charitable giving (not really a bill, but we give regularly so we handle charity like a regular bill)
  • insurance
  • rent/mortgage.

When we had debt we counted the minimum amounts due (student loans and a car in our case) as regular bills. Most of our bills fit this category and it’s probably the same for you.

Irregular bills are bills that change amounts, when they’re due, or both.

Our irregular bills are things like our power bill (different amount, but shows up the same time each month) and our oil bill (different amounts, due whenever we buy oil to heat our house).

We automate the payment of these different bills in different ways.

For regular bills, we actually set up a separate checking account to handle them. Let’s call it our Regular Bill Pay Account.

We add up how much our regular bills cost us each month, then divide that figure by 2 (the number of times we get paid in a month). We then pre-schedule a recurring automatic transfer for the day after payday from our Primary Checking Account into our Regular Bill Pay Account.

Most of our regular bills allow us to pay online and set up recurring payments. We do this and then link these recurring payments to our Regular Bill Pay Account via ACH transfer or debit card. For any bill we can’t pay online (rent for example), we set up a schedule with our bank’s Auto Bill Pay feature to send a physical check in the mail every month whenever the bill is due.

Irregular bills are a bit trickier.

For irregular bills due the same time each month, like our electricity bill, we pay them in full from our Primary Checking Account. Yeah, the amounts vary each month, but we have a good idea what to expect. Besides, they typically don’t take up a huge chunk of our finances so we just make note of them during our 10 minute spot-check at the end of the month.

Our rare irregular bills that don’t show up consistently, like our oil bill, are a different story. The colder the winter, the more oil we’re going to buy and more frequently too. The crazier the world gets, the more expensive oil is going to be for us.

Sadly, we can’t truly automate these bills so we just pay them when they come in. This only happens a couple times per year, so we just make a note of it during our monthly spot-checks.

Since the system we’ve built handles the vast majority of our finances and 99% of our bills are paid in full, on time, every time, automatically, we don’t mind paying these few irregular bills manually.

But while we manually pay these few irregular bills, we take the drama out of wondering if we have the money for them by saving money automatically.

How we save money automatically

We’re going to need to spend money on something at some point, it’s just a matter of when. So to make sure we have money set aside when we need it, we have a series of savings accounts. Just like our Regular Bill Pay Account, we automatically transfer money into our savings accounts by pre-scheduling recurring transfers two days after payday.

We have a savings account for house maintenance (now that we own our own home), house decor, car replacement & maintenance, and more. Remember our irregular oil bills? During our monthly spot-check, we pay ourselves back by transferring a matching amount from our house maintenance account to our Primary Checking Account. This allows us to pay those irregular bills drama-free.

At a minimum, I’d suggest you set up savings accounts for your housing and cars (if cars are a part of your life). If you own a house, you’re going to need to maintain it. If you don’t yet own a house and want to, you’ll need a nice down payment. If you own a car, you’ll need to repair and eventually replace it. So set some money aside from each paycheck to cover these things, automatically.

But don’t just stop there. Want to travel? Automatically set aside some cash each pay period for your plane ticket. Getting married? Automatically save a chunk of your paychecks. You can set up as many savings accounts as you’d like for whatever is important to you and your partner.

Beyond our house and car savings accounts we have savings accounts set up for our travel, a “dream” fund to pay for things like a writer’s workshop for Andrea or hang-gliding lessons for me, and a pet fund to soften the blow of any unexpected trip to the vet.

Whatever’s important to you and/or your partner’s life gets its own savings account.

How we pay for everything else automatically

Other personal finance gurus I’ve seen talk about automating our money say at this point…after you’ve invested, saved, and paid all your bills…you can freely spend whatever’s left without worrying about it.

While that’s generally true, this leaves us vulnerable to falling back into debt. Spending more money than we should is how we fall into debt to begin with. So to keep us from overspending and falling into debt, we need a backstop…a limitation. Andrea and I took care of this by setting up one final checking account to handle our day to day expenses.

Andrea and I used to use an old-fashioned Envelope System like the one suggested by personal finance mensh Dave Ramsey. Every payday, we’d withdraw some cash and put a predetermined amount into a variety envelopes.

We had an envelope for groceries, an envelope for dining out, an envelope for date night…you get the picture. The idea was for the envelopes to travel with us. If we went grocery shopping, the grocery envelope came with us. If we went out to eat, the dining out envelope tagged along.

Then, we’d pay for each activity out of its specific envelope. But when the envelope was empty…we were done with that activity until we refilled it next payday. The Envelope System was great in that it helped us build some discipline and ensured we wouldn’t spend more than we could afford. But it was also really annoying.

If Andrea asked me to pick up something at the grocery store on my way home, according to the rules of the Envelope System I couldn’t if I didn’t already have the grocery envelope with me. Sometimes we’d run out of money in one envelope early and find ourselves “stealing” from another envelope with plenty to spare.

So we consolidated all of our envelopes and digitized them. We set up a shared checking account with debit cards for each of us and called it our Living Expenses account. Then, instead of withdrawing cash to pay for our day to day expenses, we automatically transfer the same amount of money from our Primary Checking Account each payday into our Living Expenses Account. (We treat our Blow Funds the same way)

Groceries, date nights, whatever…we pay for them all from the same place now. So long as we don’t go over the total amount we transfer into our Living Expenses Account, we’re good.

Sometimes, when we notice the Living Expenses Account starting to run low we’ll slow down and get creative to make it last until the next payday. But that doesn’t mean we don’t have fun.

One of the best, most fulfilling “dates” Andrea and I had recently was when we walked around Boston, retracing our steps from the night we met 10 years earlier. It was also one of the cheapest dates we’ve had in years. We’ve learned to embrace our self-imposed limitations and get creative to come up with innovative solutions.

Spot-checking our system

At the end of the month, Andrea and I sit down together to see how our system worked and scan through our Primary Checking account for anything that sticks out. Once we exclude our directly deposited paychecks, our pre-scheduled transfers to our Regular Bill Pay account, Living Expense account, and our savings accounts…there’s usually only a couple of things to deal with…if any at all.

We’ll pay ourselves back for any irregular bills from the corresponding savings account and then see how much money we’ve got left. Typically we’ve already talked about what’s important to us and pre-decided what to do with the leftover money.

This entire review usually only takes us 10 minutes per month. We each have visibility into our finances and both leave confident our needs, hopes, and dreams are being attended to.  

No more hours-long money talks, tracking every penny, or wondering if we’d pay our bills on time, save enough, or invest at all. Our system takes care of it all for us and can do the same for you.

I figure if you’re already doing a decent job manually managing your money, you could set up a system like ours in as little as an hour. It’ll be an hour well spent!

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