Nearly every personal finance book or blog will advocate a handful of golden rules to build wealth.
Among them: automate your finances.
Most personal finances experts are big fans of this approach, and I can see why. I first learned about automation from Ramit Sethi in “I Will Teach You to be Rich.” The concept is simple: set up your financial life so that everything is going where it’s supposed to be going automatically as soon as your paycheque hits your bank account. You do not even really see the money available to spend and you don’t have to lift a finger.
Arrange automatic bill payments, student loan payments, and contributions to your RRSP/401K.
Set up a biweekly or monthly transfer into your investment account.
Have specific savings goals, like a down payment or a wedding? Make a designated savings account and automate contributions into those accounts, too.
You will be saving without even really realizing you are saving. No effort required. No time spent talking yourself out of contributing to your retirement fund if you are running short on funds after an online shopping binge. And the money just starts to accumulate.
I get how wildly appealing that is. Saving money can be a weird combination of boring and hard – at least that is how I felt about saving until recently. Humans function via the path of least resistance on most things that are good for us.
You will only eat healthy or work out if you remove as many barriers as possible that keep you from doing those things. Like sleeping in your workout clothes. Like meal prepping and stashing containers of healthy food in the freezer so you don’t eat an entire pizza when you get home from work.
Automating your finances is the equivalent to that. It removes barriers to saving and investing. That can be a beautiful thing.
Yet I have maintained the majority of my finances as a manual activity. This includes my student loan payment, most of my retirement and TFSA contributions, and saving for ma big goals.
The only real exceptions are my rent, which automatically gets withdrawn every 1st of the month and the 5% of my biweekly paycheque that automatically gets put toward my work pension plan.
That begs the question: Why have I kept everything so…unautomated?
Here are five reasons why I like keeping my finances at the press of my own button.
1. Saving is a privilege and I want to appreciate it.
Having an extra $50 per month to put towards your student loan balance? Or trimming your budget to find another $100 you can send toward your retirement?
That is a privilege, my friends.
I am fortunate that I can find the money in my budget to build up my emergency fund, finally start funding my retirement, and yes, save up for the fun stuff, too. Not everybody is well positioned to do that. Many people work two jobs and cannot save for retirement.
All of this means that part of me likes taking the moment out of my day, out of my week, to sit down with my finances and set up the transfer myself. It has helped me to realize and appreciate how much I really have. It has helped me recognize how privileged I am. Being mindful of this has also helped me visualize how and where I want to give money when I have more of it.
2. I want to be intentional about my savings right now.
There are so many daily activities we automate now (check out this awesome post from Ms. ONL recently about convenience services and gadgets).
Some of them I find borderline obscene (like really, humans need these things?)
Some are downright amazing.
Exhibit A: dishwashers.
Exhibit B: GPS.
But I was bad with money for 28 years and I am still trying to un-learn a lot of ingrained money habits and behaviours.
Maintaining control over every bill payment, every transfer into my savings has been a good way to actively participate in putting my financial life back together. I am still tracking every penny I spend. I want to be in the driver’s seat right now. This may change in the future when my financial habits have improved and I just want to set it and forget it.
This point may sound counterintuitive – I suck with money so I do not want to automate. A common argument is that automation can help people who are traditionally poor savers. But I am a control freak and now that I know what to do with my money (more or less), I like doing it myself. To each their own.
3. It does not take much time.
Going back to my earlier point about how awesome dishwashers are – so much yes. As a person living sans dishwasher right now, I can vouch for how much some automation is totally and completely worth it. Some automation saves you hours of mind numbing and possibly soul destroying work every week or month (I really hate doing dishes). Sold.
But paying my bills online? Sending money to my investment account? This takes five minutes out of my week. For some people, that’s too much. Cool. I am down for spending those five minutes though.
4. My side hustles ARE my savings money.
I earn a reasonable income and I usually have a small gap between my salary and my spending. My student loan payments alone take up about 31% of my monthly take-home salary. That’s huge.
Right now, the only way I have really been able to save for my goals at all is through my side hustles. And side hustle money, my friends, is unpredictable income.
In January 2017, I earned $0 in side income.
In June 2017, I earned $1863.95 in side income.
The idea of setting up automatic transfers when my side hustle money varies so wildly from month to month just doesn’t make sense right now.
5. I am a huge nerd and I like doing it.
Money is fun! Is there not some kind of strange satisfaction in moving a ton of cash into your investment accounts? Tell me there isn’t, I dare you.
So those are my five reasons why I haven’t gotten fully automatic yet. Have you fully automated your finances? Tell me why or why not in the comments – I would love to chat!