How to Use Financial Automation to Build Wealth

November 28, 2023

Let's be honest – managing your finances can feel… overwhelming. Between juggling bills, tracking spending, and trying to figure out the best way to invest, it’s easy to get bogged down and lose sight of your financial goals. But what if I told you there was a way to streamline the process and actually build wealth with less effort? That’s where financial automation comes in.

Forget meticulously logging every expense in a spreadsheet (although, good budgeting habits are still important!). Financial automation is about using technology to take the “busywork” out of your finances, allowing you to focus on the big picture – actually investing for the future.

What Exactly Is Financial Automation?

It's a broad term, but essentially, it’s using tools and systems to handle your financial tasks automatically. This can include anything from:

Automated Savings: Setting up recurring transfers from your checking account to a savings or investment account. Even small, consistent amounts add up over time.
Bill Payment Automation: Scheduling automatic payments for your recurring bills – no more late fees or missed payments!
Robo-Advisors: These platforms use algorithms to build and manage your investment portfolio, based on your risk tolerance and goals. They handle everything from asset allocation to rebalancing.
Smart Budgeting Apps: Apps like YNAB (You Need A Budget) or PocketGuard can automatically categorize your spending, track your progress against your budget, and even alert you when you’re overspending.
Tax Loss Harvesting: Some robo-advisors and investment platforms automatically sell investments that have lost money to offset capital gains taxes.

Here’s How Automation Can Help You Build Wealth:

Consistency is Key: Automation makes it far easier to stick to your financial plan. When you've set it and forget it, you’re more likely to consistently invest and save.
Reduce Emotional Investing: Let’s face it, emotions can drive terrible investment decisions. Automation removes the temptation to panic sell during market dips or chase shiny new investments.
Maximize Returns: Robo-advisors can often outperform traditional investment strategies due to their low-cost approach and ability to rebalance portfolios efficiently.
Free Up Your Time: Seriously, think about all the hours you spend managing your finances. That time could be spent pursuing your passions, learning new skills, or simply relaxing!

Getting Started with Financial Automation

Assess Your Current Situation: Take a realistic look at your income, expenses, and financial goals.
Choose Your Tools: Research different budgeting apps, robo-advisors, and other automation tools. Read reviews and compare features.
Start Small: Don't try to automate everything at once. Begin with one or two key tasks, like automating savings or bill payments.
Regularly Review: Keep an eye on your automated systems to ensure they’re still aligned with your goals. Markets change, and your circumstances may change too.

Financial automation isn’t a magic bullet, but it is a powerful tool for building wealth. By taking the “busywork” out of your finances, you can focus on what truly matters: creating a secure and prosperous future.