Automatic Savings Works, Enough Said

Every year I write up my financial goals and every year it becomes increasingly easier and easier not only to write these goals but also reach them.  That’s when I started thinking about why creating and accomplishing my financial goals has become relatively easy.

I started thinking about what goals were the easiest (401K, H.S.A.) and then what goals were the most difficult (Roth IRA, PMI removal).  It was clear, the answer is the goals that were easy and accomplished without much thought all were set up to happen automatically.

Chicago Snowfall

Automatic Savings

Each year during benefits enrollment, the selections that lead me throughout the upcoming year are made.  For example in November of 2017, I made the automatic contribution rate for my entire 2018 calendar year.  Every paycheck for the next 26 paydays I will have my 401k contribution taken out until it reaches the maximum limit of $18,0000.  I literally have to do nothing for all of 2018 and I will reach my goal.  In other words, Automatic Savings works.

Not So Automatic Savings

The last 2 years I have waited to contribute to my Roth IRA, nothing about this has been automatic.  In 2016 and 2017 I didn’t complete my goal during the calendar year (2016 IRA was funded in early 2017).  Why?  Because it was not automatic.  I didn’t make it a priority by setting this up at the beginning of the year like my 401K.  See the difference automatic savings can make?

Not So Automatic Everything Else is Really Hard

As I was writing down my personal goals for the year, I realized that over and over I have failed in my attempt at weight loss and exercise.  I finally realized why it’s so difficult.  None of it is automatic.  No one puts food in my mouth at 8 am for the exact amount of calories and nutrition I need.  No one makes my legs move to go for a run or lift weights.

Our brain gets in the way.  If something is left to a decision or a chance to do or not to do something, chances are we are not going to do it.  Tonight, I have a choice to go visit the boxing gym and see if they can add me to the class list.  There is absolutely a chance that at 6 pm I will choose not to go.  The Not So Automatic life is really hard!

Automatic Clothing

Mark Zuckerburg the founder and CEO of Facebook is famous for wearing the same gray t-shirt every day.  He essentially made his clothing choice automatic, but why did he do it.  According to GQ, Zuckerberg has said this in the past:

“I really want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve this community … I’m in this really lucky position, where I get to wake up every day and help serve more than a billion people. And I feel like I’m not doing my job if I spend any of my energy on things that are silly or frivolous about my life.”

The key move made by Zuckerburg is he took an area of his life and made it automatic.  He did this to reduce the number of decisions he makes in the day and focus on what matters most to him and that’s Facebook.  The reasons for his decision might be different than yours or mine, but the results are the same.

Make It Automatic Audit

Making your savings and even further, your financial life automatic should be your number one goal in 2018 if it is not already.  In fact, I went through and wanted to list the number of financial items that are not automatic for the Even Steven Money household.

  • Roth IRA (Even Steven only)
  • Individual Brokerage (Savings automatic, purchases for individual stocks are manual)
  • HELOC principal payment (Manual payments each month)
  • Credit card (Even Steven only)
  • Utilities (Manual payments each month)
  • Miami Taxes and Insurance (Savings automatic, payment is not)

This month I’m going to take action and update these accounts to make my financial life even more automatic.  The most effective strategy is to make my financial decisions automatic as I purse financial independence, it just may be time for you to do the same.  I challenge you to make a list of your financial decisions and see how automatic they really are.  Don’t just make the list, update the accounts to be automatic because Automatic Works.

As always, thanks for reading.  Don’t forget to join me on Facebook, while I share my personal money tips that I use for the month of January to get your finances in the right spot in 2018.

 

4 Responses to “Automatic Savings Works, Enough Said

  • So true… I am in the same situation: what is automated works, what is not is harder…
    On the financial side, I have some actions to take and might need to change bank to reach my goal.
    On the sports side: I want to run again, still have to figure out how…

    • EvenStevenMoney
      4 weeks ago

      What’s great is once you take that action you are all set because it’s Automatic! I’m finding out every little action counts with sports and exercise. Kind of similar to just getting started with your money, write it down or make an effort and just keep repeating to find out if it works for you. It’s not automatic but it has helped me today and in the past. Best of luck on the running!

  • Automation is great! Just be sure when you automate any bill paying or loan repayments that you at least check the history transactions to confirm the payment was made. I just cant trust automated payments because I have seen some fail, and when they fail and you are not aware, it could negatively affect your credit scores.

    Anyhow, that is just worst case scenario. Automating life is key!!!
    Alexander recently posted…My AirBnB Experiment in Indianapolis – Traditional Rental Converted to a Vacation RentalMy Profile

    • EvenStevenMoney
      4 weeks ago

      Thanks Alexander! Great point while automation is great as it relates to investing and bill payments, caution to still review the investments and especially check the bill payments to make sure they are not only being applied but that the bill is not incorrect or higher than expected. Sage advice!!

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