Digital Financial Planning Can Make Life Easier
Sorting out bills, tracking expenses, and reviewing bank statements can feel like a chore. They cause stress and take up valuable time better spent elsewhere. In fact, 40 percent of American adults say managing their money limits the extent to which they can enjoy their day-to-day life.
Learning to take advantage of digital financial planning apps can help you stay on track with your financial goals and make sure your money is working for you.
What Does Digital Financial Planning Mean?
It means setting up a system(s) to pay bills on time and put cash away for your future self through savings and investments.
Thanks to the proliferation of the internet and a slew of technological advances, you can now save yourself a lot of time and stress by setting most of your monthly tasks on autopilot.
It may cost you a bit of time to set up, but you’ll save hours by automating your finances.
Ways to Automate Your Financial Planning
- Set up direct deposit: The first step to leveraging digital financial planning is to automate how you get paid. Over the past 2 decades, direct deposit has become the norm for most businesses and payroll companies because of its simplicity and efficiency. If your workplace offers a direct deposit option, ask to have your paycheck deposited into your checking account directly on payday.
- Set up automatic bill payments: Many bills (rent, mortgage payments, insurance payments, subscriptions, etc.) can be automatically paid each month using your credit card or checking account. You can set this up with your bank to be paying the service provider or billing company or service provider on your behalf. This can help you avoid late fees and keep your credit score in good standing.
- Pay yourself first: David Bach talks about the importance of “paying yourself first” in order to grow your wealth in his book The Automatic Millionaire. Bach suggests you should fund your savings accounts before you ever touch your paycheck. You can set up automatic transfers from your checking account to your savings account regularly. This can help you save for specific goals, such as an emergency fund or a down payment on a house.
- Use budgeting apps: Tracking your expenses using manual methods involving a pen, notebook, and calculators can be very exhausting. There are many free budgeting apps available that can help you track your spending, set budgeting goals, and even categorize your transactions automatically.
- Automate your investments: You have set up a direct deposit, settled all your bills, saved up for emergencies, and budgeted for other expenses. So, what should you do with the money you have left? Once you have spoken to a trusted investment counselor and worked out what investment strategy is best for your financial goals, you can set up automatic contributions to those investments.
- Use notifications and alerts: You can set up notifications and alerts on your credit cards and bank accounts to alert you of low balances, upcoming payments, and unusual activity.
- Use financial planning software: There are several free and paid financial planning software that can help you create a financial plan, monitor your progress, and even help you adjust your plan as your financial situation changes.
Benefits of Automating Your Finances
- You can avoid decision fatigue
- You avoid late fees/penalties
- It is secure
- It leads to peace of mind, a stress-free life
“Taking care of your money can be an intimidating process,” says Darren Nomberg, Senior Vice President of Investments at David Lerner Associates. “Start by talking to an investment counselor and once you have a plan in place, set up as many automated systems as you can to save you time and stress.”
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