How I Automate Our Finances to Make Saving Money Easier

This is how we automate our finances so that saving money and paying the bills is easier, and reduces the discipline needed to build savings.

Here is a modern money management tool that I’ve found to be a powerful companion to creating a budget. What’s more, it can be used in conjunction with a budget OR on its own.

The tool I’m talking about is automation, specifically scheduled, recurring payments via banking apps.

According to studies, willpower isn’t very reliable (you can read an extensive summary of the research on willpower in this American Psychology Association article). Although it’s worth pointing out that newer studies suggest willpower might not be as limited as we thought, so maybe I shouldn’t be making excuses for myself.

Either way, as embarrassing as it is to admit, I pretty much have zero willpower, particularly when it comes to chocolate, but also pretty much everything.

If I don’t find ways to hack my brain, then stuff just doesn’t happen.

(Luckily, studies like the one above can soothe my battered ego.)

Discipline is good and all, but if it’s not my superpower? Then I rely on sound scientific suggestions (I just wrote that for the alliteration) to stay lazy, bypass discipline, and still see results.

Environment v Discipline – The Winner Is…

So, if I can’t rely on willpower, how do I reach any goals?

One hack is to change the environment to make taking action easier.

For example, dieting (ugh). You’ve probably heard the advice that says to only keep healthy food in the house. This forces you to only make good eating choices without having to rely on discipline.

Living next to a 24-hour servo with family-sized blocks of chocolate really screws this up – just saying.

So how does this apply to saving money?

Instead of relying on willpower to save, I have set up a system that automates the savings.

Out of sight, out of mind is the idea.

Here’s a bit of science-y stuff that supports this habit: in a 2021 meta-analysis of financial self-control strategies, researchers found that using strategic behaviours is more effective than relying on willpower alone, which they described as ‘effortful and cognitively costly.’

And honestly, I’m on a cognitive budget as well.

While self-control is often a battle between me and myself, this research shows that proactive strategies – like automation – work by preempting temptation.

Basically, it helps resolve the tension between the spendthrift me of today and the regretful me of tomorrow by preloading the default action so I don’t have to make a choice.

(Reactive strategies also work, but that’s a different article.)

Obviously, I didn’t make up savings automation. If you follow the 50/30/20 rule, as explained here by Investopedia, it also relies on automation.

However, I like to be a little more precise, 50/30, etc. Below is an overview of my method.

Disclaimer: This is general information only. In this blog, I share my personal savings and budget stories and what works for us. You should always consult a qualified financial expert when making money decisions (not a random stranger on the internet like me – or even your mate at the pub).

How I Automate Our Finances

So, getting to my lazy person strategy – it relies on two parts:

1. Paying myself first
2. Having a savings plan

I admit, the savings plan is a bit of work up front. But…I created it almost twenty years ago, and it’s been running almost on autopilot ever since, so I’m shoving it in the lazy strategy.

The system is simple, the execution not always easy, especially when money is tight.

As I’ve mentioned in other articles here on the blog, there have been times when all we could save each payday was $2.

Paying Myself First

I’ll talk more about having a savings plan below, but here I want to talk about ‘willpower’ and paying myself first.

Automation takes the thinking out of the process. I set up a recurring transfer from our transaction account to our savings account, and boom! It all happens without me having to make a decision in the moment.

Even when it is just $2.

I’m not fighting myself ‘out-reasoning’ myself with thoughts like ‘I will just save more next week,’ or ‘skipping one week won’t matter’, or ‘what the heck, I deserve a treat this week!’

Because I’ve said all of that to myself.

Instead, the automatic payment happens while I’m still asleep, and I can live off the remaining while still saving.

It’s not a magic bullet, but it significantly improves the chances of savings actually happening.

As a side note, the study highlights that making money hard to access – i.e. putting it into a savings account separate from your regular bank – adds friction, so I’m less likely to dip into my savings.

In other words, I don’t want to create an easy-access 24-hour servo that’s ready for me whenever temptation strikes.

Calculating My Automations

You can totally use something like the 50/30/20 rule to make automating money easier.

But I’ve found that when money is tight, I don’t have the luxury of saving 20% of my income.

When every penny counts, you have to count every penny.

(I’m sure I didn’t make that quote up, but I searched and couldn’t find the source, so if you know where I stole it from, let me know.)

Here’s how I automate our savings.

1. First, I automate our debt repayments. For us, it’s our mortgage. If I were still renting, I would automate that first.
2. We automate our savings – even if it’s $2. I’ve always found that having a savings habit is important, even if it’s only a little bit, and the above study supports that.
3. As a freelancer, I pay my own super (retirement savings), so I automate that to come out every payday.
4. Then we calculate our bills and put aside a set amount each payday. This is called bill smoothing (similar to the old envelope system) and makes bill paying easier.
5. As part of our bill smoothing, we also put aside money for things like Christmas or large expenses that we know are upcoming. For example, we started saving for the compulsory high school laptop one year before we needed to buy it to give us time to save up.
6. Finally, we put money in an account for direct debits (yes, like Netflix).

Once we’ve automated our payments, we can use the rest for groceries and, well, not much else really.

Schedule the Transfers

All those calculations seem like a lot of work, but as I said, I still use the same spreadsheet every year for the past twenty-odd, making small adjustments for inflation each year.

(Ok, large adjustments for the past few years, because inflation has been a lot lately.)

So the ROI on that time spent has been amazing.

The final step is to log in to my online banking and schedule these amounts to be automatically transferred each payday.

Again, out of sight, out of mind.

Each year I adjust the transfer amount for the inflation bit if I can or cut expenses if I can’t.

Are There Pitfalls to Automation?

While automating your finances can be a game-changer, it’s not without its pitfalls.

One downside is that it’s easy to set and forget – this can backfire when income or expenses change, and I’m not adjusting my transfers to match.

Hello, inflation.

Plus, automation doesn’t completely replace the need to keep an eye on my accounts for unexpected transactions, scams, or banking errors.

But…I have an automation for that, lol. I really try not to rely on my brain. I use Todoist to set reminders to review my bank accounts on a fortnightly basis.

---

Here’s the takeaway: while there are a lot of fancy budgeting tools out there, and I’ve written about them before, you don’t need them.

Automation is a powerful money management tool – combined with a simple spreadsheet if you like. Scheduling savings and payments makes managing our finances a lot easier, and I’m all for cognitive offloading.

Do you automate your finances? Share your experience and insights in the comments below.