180: 10 Ways to Automate Your Finances

Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better, helping you to understand the current world of financial planning and investments, here are your hosts: Josh Robb and Austin Wilson.

Austin Wilson:

All right. Hey, hey, hey. Welcome back to The Invested Dad’s podcast, the podcast where we take you on a journey to better your financial future. I am Austin Wilson, Research Analyst at Hixon Zuercher Capital Management.

Josh Robb:

And I’m Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?

Austin Wilson:

Two things. Number one: Subscribe if you’re not subscribed already. So hit that plus, follow icon, whatever you got on your podcast player. Hit that. That way, you get new episodes each and every week when they are dropped on Thursdays. We haven’t missed one yet.

Josh Robb:

That’s right.

Austin Wilson:

Number two: Go to our website at theinvesteddads.com. Sign up for our weekly newsletter. That way, you know A). when the episode comes out, B). you get a link to listen to it, C). you get some fun show notes.

Josh Robb:

There you go.

Austin Wilson:

I mean, come on. How can you not do that?

Josh Robb:

It’s a win.

Austin Wilson:

So that’s how you can help us. But today, we’re here to help you and we are going to be discussing 10 ways-

Josh Robb:

Top 10.

Austin Wilson:

To save time and money by automating your finances.

Josh Robb:

All right.

Austin Wilson:

Because finances are so easy if you put them on cruise control. These tips are going to help you stay ahead of most people because you’re going to be not even thinking about how your money’s going. It’s just doing things on its own, which is going to be very simple, easy, and usually very free.

Josh Robb:

That’s right.

Austin Wilson:

Plus, maybe you’ll give some benefits. So I have 10. We’re going to go to one through five, and then Josh is going to hit us-

Josh Robb:

I have a dad joke.

Austin Wilson:

With a dad joke of the week. And then we’re going to do six through 10, and you’re going to love it, okay? So just buckle up.

Josh Robb:

I’m ready.

 

[1:39] – Tip #1: Set Up Direct Deposit 

Austin Wilson:

Number one: I think this is too easy but set up direct deposits for your paychecks. That means when you get a job, or you’re already at a job and maybe they’re still handing you a physical check. I don’t know who does that.

Josh Robb:

Have you had a job that done that for you?

Austin Wilson:

Yes. Well, usually it was … Is the IRS listening?

Josh Robb:

They are.

Austin Wilson:

When I was young-

Josh Robb:

Okay.

Austin Wilson:

It was off-the-books construction work or whatnot.

Josh Robb:

But you’d count it on your income tax return, for sure.

Austin Wilson:

Oh, yeah. For sure.

Josh Robb:

Yep.

Austin Wilson:

So anyway, usually it was kind of ad hoc stuff. But since I’ve had a full-time employer, and even when I was working part-time in college and whatnot, direct deposit all the time. So what you need to do: go to your HR department. A voided check is probably more than enough. So you have to have your voided check, you’ll have a checking account number and a routing number.

Josh Robb:

A lot of times your employer will have a form you just fill out.

Austin Wilson:

Exactly.

Josh Robb:

And they can get it set up.

Austin Wilson:

They may need a voided check as well.

Josh Robb:

Yeah.

Austin Wilson:

But anyway, that’ll have all the information you need to set up direct deposits so that when you get paid every week or two weeks or month, or however you get paid, boom.

Josh Robb:

Right in there.

Austin Wilson:

Directly into your checking account. You don’t need to fiddle about taking a check, going to the bank, and doing all that stuff. This is not the 1940s.

Josh Robb:

That’s right. My first full-time job, I received an actual physical paycheck every two weeks.

Austin Wilson:

Was it like Roman gold coins?

Josh Robb:

No, but it was in an envelope handed to me every time.

Austin Wilson:

Man. See, don’t know how I feel about that.

Josh Robb:

I could feel it. I did feel it.

Austin Wilson:

I know. I, mean some people might like that. Back in the day, you probably would’ve got an envelope of cash.

Josh Robb:

Then you had to report that.

Austin Wilson:

Yeah. I think of how hard the IRS’s job was.

Josh Robb:

Tips.

Austin Wilson:

Back when everyone was cash all the time, the IRS’s job was a lot harder.

Josh Robb:

Yeah.

Austin Wilson:

Now it’s like, “Oh, no. We saw it went into your bank account.”

Josh Robb:

Yep. There’s evidence.

 

[3:16] – Tip #2: Set Up Automatic Payments 

Austin Wilson:

So that’s number one. Number two: Set up all bill payments, credit card payments, all of the above to be automatic.

Josh Robb:

Any debt, any obligation.

Austin Wilson:

Or bill.

Josh Robb:

Any payment.

Austin Wilson:

Yeah, any debt or any bill.

Josh Robb:

Anything you owe.

Austin Wilson:

Automatic.

Josh Robb:

Automatic.

Austin Wilson:

So usually, when you open up a credit card, or even things like your utilities, trash, electricity, gas, water, all these things, internet, you can link either a bank account or a credit card to pay it. So you’re not getting a bill in the mail, and then having to depend on yourself to remember to write the check, to mail it back before the due date, and all that stuff. It just directly either hits your credit card or hits your checking account, pulls the money out automatically.

Josh Robb:

So nice.

Austin Wilson:

Via ACH transaction. And that is a super convenient way to do what? To avoid late fees and penalties.

Josh Robb:

Late penalties. Yes. Now I’ll tell you. I had a trash company that did not have automatic bill payment. They wanted you to leave a check in your mailbox so that when they picked it up, they would grab the check along the way.

Austin Wilson:

Yeah.

Josh Robb:

Oh, man.

Austin Wilson:

I know.

Josh Robb:

That’s my least favorite thing in the world. No longer have them.

Austin Wilson:

Yeah. There have been a handful of things over the years that were like that. And right now, I think one of the only bills that we have to pay, and it’s not necessarily a bill, but we have a wonderful lady who comes and helps us clean the house every couple weeks or whatever and she wants a check. So I have to remember to write one check a month every couple weeks or whatever, and the rest of it is automatic. So really …

Josh Robb:

Ours is preschool. We have to write a preschool check every month.

Austin Wilson:

This is just one way to really make sure you don’t miss things and something’s crazy. Even mortgages, right? Set your mortgage up to be automatic. One thing that could really impact your success financially is if you have missed payments and late payments because that can impact things like your credit score, which can make your loan terms … or if you want a mortgage or a car loan, which we’re not advising … very unfavorable for you. So this is one way to make sure you’re never late and you never pay a dollar of late fees.

Josh Robb:

Speaking of credit cards, set it up automatic, but make sure you pay the full statement balance every month. Make sure. You don’t want to carry a 20-some percent interest rate-

Austin Wilson:

Or 30.

Josh Robb:

On debt.

Austin Wilson:

We want to be the people credit card companies hate.

Josh Robb:

Yes.

Austin Wilson:

You want to be able to use all the benefits.

Josh Robb:

They don’t want everybody delinquent.

Austin Wilson:

Yeah.

Josh Robb:

They get interest off of it.

Austin Wilson:

Right.

Josh Robb:

But they also get other benefits. They don’t hate you, they’re just not making as much money.

Austin Wilson:

So we want to use all the benefits and all the perks of credit cards without the downfalls and the pitfalls. So the perks are things like maybe purchase protection, enhanced warranties.

Josh Robb:

Convenience.

Austin Wilson:

It’s convenient. It’s super handy. Fraud protection, those sorts of things. The downfalls that we want to avoid are things like exorbitantly high interest rates.

Josh Robb:

30%.

Austin Wilson:

So that is a great point. Always pay your full statement balance each month and just set your automatic payment to pay that full statement balance. You’ll never miss. You’ll never pay a dime in interest and you’ll never be late.

Josh Robb:

Yep.

 

[6:18] – Tip #3: Automate Your Savings 

Austin Wilson:

Beautiful. Number three: Automate your savings too. You’ve automated your bill pay, you’ve automated that you have money coming in. Automate your savings. So you can set up automatic transfers … either within one bank, between the checking and the savings account, or between multiple banks even, where you have a checking account and a savings account at a different bank … to automatically save every single month. So if you’re working on building up a six-month emergency fund, which is something that we would like to see people have, you know you need $10,000 to be in that. When you know that if you just divide that over 10 months, automatically transfer $1,000 a month. You’re going to have it there, fully funded in 10 months, something like that.

Or this is just a way to make sure that you’re setting money aside, right? And I’m going to talk in our next point about what those things could be for and kind of the way I do it personally, but automatically make sure that you’re saving. And this is not talking about investing. We’re going to get to that later on. But this is just setting money for emergencies or whatever aside.

Josh Robb:

And also, you may be doing this already with a 401k because you’re automatically going to deduct that from your paycheck.

Austin Wilson:

Absolutely.

Josh Robb:

So that’s an automatic savings vehicle that a lot of people are already doing. They may not realize it.

Austin Wilson:

And that’s going to get to a point we’re talking about in a little bit.

Josh Robb:

Yes.

 

[7:34] – Tip #4: Automatic Saving for Recurring Bills & Self-Escrow 

Austin Wilson:

So my number four is very similar to number three: Automatically save for large recurring bills each month.

Josh Robb:

Save each month for reoccurring bills.

Austin Wilson:

Yes, exactly. So I call this self-escrow. If you go to a bank, and especially if you don’t have 20% down, you’re going to have what’s called mortgage insurance on top of things, but you also have to escrow, through the bank, your property taxes and your insurance, right? So essentially, you’re paying a little bit extra each month, and then they’ll pay your bill for you.

Josh Robb:

Yep. They put a bill bucket in there.

Austin Wilson:

So that’s called an escrow, and then there’s an escrow account. If you don’t do that, or for other bills that are not included in that, I do what’s called self-escrow.

Josh Robb:

Okay.

Austin Wilson:

So here’s what I do: I take my total amount of property insurance for the year, which you know generally what it was. You know what it was last year and you know that it might be a little bit more this year, but I take that amount plus my amount of property taxes. Same thing. I know generally what it was last year so I can inflate that by a little bit and round. I add in my full-year auto and motorcycle insurance.

Josh Robb:

Oh, there you go.

Austin Wilson:

And then, I come up with a total cost, for a year, of what it would cost for all of those big bills. Because those are big bills, and they happen once or twice a year depending on how you have it all set up. And then, I divide that by 12. So every month on payday, because we get paid once a month, I send one-twelfth of that total amount from my checking account, where my money had automatically been direct deposited, to a savings account, and we’re going to get to what savings account in the next step. But I transfer that so when the bill comes, either A, I have it set to automatically be paid from that savings account.

Josh Robb:

Yes.

Austin Wilson:

Or B, I will then transfer it back and write a check.

Josh Robb:

Yep. And the thing along with that, and this would kind of fall in the bucket, is something like Christmas.

Austin Wilson:

Yeah.

Josh Robb:

You could do the same thing and just say, “It’s not a bill, but I have a large expense at the end of the year for buying presents for my kids or family,” or whatever. You could start saving for that.

Austin Wilson:

Better yet, don’t buy anything.

Josh Robb:

Or just don’t buy anything.

Austin Wilson:

That’s not really practical.

Josh Robb:

Grinch.

 

[9:35] – Transferring to a High-Yield Savings Account

Austin Wilson:

You grinch. Number five goes along with number three and number four. I mean, we’re talking savings right now.

Josh Robb:

Yes.

Austin Wilson:

Suppose you work with a big bank or a regional bank, a local bank, whatever, and you have a checking in savings account with them. They often have very, very low interest that they’re paying you. So you often get little to none on especially checking, but savings even you’re getting fractions of hardly of any interest, right? So my advice and what I do, this is really from you, years ago. You had said, “Hey, you should be getting something on your savings,” and what I did was I opened up a high yield savings account. And this is generally offered online only. These are not typically through major banks, in terms of physical banks, but there’s a handful of different options out there where you open up a bank account online. These are savings accounts. And because that bank does not have to deal with as many people and physical infrastructure, they’re able to offer you much more lucrative interest savings rates.

So right now, you should be getting 3.75% to 4% probably in an online high yield savings account. There are no fees, no minimums. One of the main requirements is you’re often limited with how many money movements you can make.

Josh Robb:

Yep. And even those are getting better.

Austin Wilson:

Even then, you’re maybe six to 10 a month, and that is plenty if you plan it all out. So what I do with my self-escrow that we just talked about, or automated savings in general, is I am automatically transferring from my checking account, which earns nothing admittedly, to an high-yield online savings account and letting those things build up. So what I’m doing is I have all that money, … first of all, it’s out of sight, out of mind … I’m not seeing it when I log into my checking account. But it’s also earning almost 4% interest.

Josh Robb:

There you go.

Austin Wilson:

And if you have a fully funded emergency fund out there sitting at 4% interest, you’re getting a nice little bit of interest each month.

Josh Robb:

A little extra.

Austin Wilson:

And generally, it is taxable income, the interest you’re getting on this, but you should feel very good about earning a little something on your savings.

Josh Robb:

That’s right.

 

[11:42] – Dad Joke of the Week 

Austin Wilson:

So that is number five, Josh, but we need to take a break.

Josh Robb:

Yes.

Austin Wilson:

I’m getting a little jacked up over here.

Josh Robb:

Yeah, gratitude is a good thing.

Austin Wilson:

It is.

Josh Robb:

Yes. I was thinking. When I was working my first job out of college, I was so broke that they shut off my electricity.

Austin Wilson:

Oh, man.

Josh Robb:

Yeah. Those were the darkest days of my life.

Austin Wilson:

Those were the darkest days of my life.

Josh Robb:

I told that joke to my kids and my one son looks at me and he goes, “Did you really have your electricity shut off?” I’m like, “No. It’s a joke, okay? Calm down.”

Austin Wilson:

Probably because someone didn’t have automatic bill pay set up.

Josh Robb:

That’s right.

Austin Wilson:

That’s why it would happen.

Josh Robb:

So, I like that joke.

Austin Wilson:

So, we got five down.

Josh Robb:

Yes.

Austin Wilson:

We got five more to go.

Josh Robb:

Okay.

Austin Wilson:

And I think Josh is going to get pretty excited about what we’re talking about next because this is kind of your wheelhouse. So, we’ve automated our deposits.

Josh Robb:

Everything.

Austin Wilson:

We’ve automated our bill pay. We’ve automated our savings, in terms of cash savings for things that need to be spent. And then, we’ve earned some interest on that.

Josh Robb:

Yes.

Austin Wilson:

Now we’re going to talk about big picture.

Josh Robb:

Yes.

 

[12:40] – Tip #6: Automate Your Investments 

Austin Wilson:

Automate your investing. Hello. And you mentioned this earlier: You’re probably already doing this if you’ve taken our advice.

Josh Robb:

Yep. One way.

Austin Wilson:

And you’re taking advantage of your 401K match. You are probably automated and you’re investing already. So, you’ve checked boxes or whatever and set your asset allocation, what you want it to be. You’re setting a percentage aside each and every paycheck, and it’s going directly into your account-

Josh Robb:

That’s right.

Austin Wilson:

To be invested into the market. And why is this good? This is good because it’s a habit and because you’re not seeing it and having to make that choice manually each and every month, which is a hard thing.

Josh Robb:

Yep. You don’t have to remember.

Austin Wilson:

And it’s a hard thing to part with money. But if it does it automatically, you already parted with it and you never saw it, right?

Josh Robb:

Yep.

 

[13:19] – Tip #7: Dollar-Cost Averaging

Austin Wilson:

But my next point, number seven, leads right into this because you take advantage of one of Josh’s favorite things, and that is dollar cost averaging. Josh, tell us what dollar cost averaging is.

Josh Robb:

So the concept of when you consistently add money on a set schedule, whether that’s biweekly, monthly, whenever … again, if we’re talking 401ks, every paycheck … that because it’s coming in on a consistent schedule, the ups and downs of the market are smoothed out.

Austin Wilson:

Yep.

Josh Robb:

You’re averaging into the market. That’s what the dollar cost averaging is. The cost is averaged out. The days when you’re depositing the money and the market’s up, you’re spending a little more to buy those investments.

Austin Wilson:

So, you’re buying less shares.

Josh Robb:

Yes. That’s okay. When the market’s down, you’re buying more shares because the prices down. But when you go through a whole working career, that gets averaged out because you’re consistently doing it regardless of what’s going on in the market.

Austin Wilson:

Yeah.

Josh Robb:

That’s the key is you just consistently do it. So what does that do? It smooths out your returns, gives you actually better performance long term from a investment standpoint, and it allows you to not care of, “Is now a good time?”

Austin Wilson:

It takes the emotion out of it.

Josh Robb:

Every time’s a good time.

Austin Wilson:

Yeah, it takes the emotion out of it.

Josh Robb:

It does.

Austin Wilson:

Because emotions with investing are counterintuitive. Okay, so we’re recording this in … what month is it? April?

Josh Robb:

April.

Austin Wilson:

April of 2023. We’re still in a bear market. We’ve been in a bear market for over a year. And right now, it seems like there’s a lot of tension. There’s a lot of drama going on. The economy, there’s uncertainties. It seems like a bad time to be investing. But often, these are the best times to be investing. And if you are dollar cost averaging, you’re buying more shares throughout this whole bear market. And when the market’s made whole again, which it will, you will have more at the end. So it’s a rule-based investing, right?

Josh Robb:

That’s right.

 

[14:59] – Tip #8: Use a Budgeting App 

Austin Wilson:

Takes the emotion out of it. All right, number eight: Use a budgeting app. And you’ve talked about these before, but there are multiple free ways to be able to track your spending via an app that automatically downloads your transactions, where all your money flows in and out and where they’re going, and maps them to certain categories. And this allows you to really know where your money’s going. And then, you can tweak things as you want from there. But this is a good way to automatically know where your money’s going with technology. Technology is a beautiful thing. You could not do this a decade or two or three ago. It was impossible without manually sitting down and plugging it in.

Josh Robb:

That’s right.

Austin Wilson:

There are multiple free options.

Josh Robb:

There’s some you pay for.

Austin Wilson:

There’s some you pay for.

Josh Robb:

They offer additional things.

Austin Wilson:

Right.

Josh Robb:

I don’t have a preference. If you find one you really like, find one that works. If it costs a little bit, but you like the additional features, great. There’s a lot of free options out there.

Austin Wilson:

But a lot of people are more apt to stick to a budget-

Josh Robb:

More apt?

Austin Wilson:

Apt. See what I did there? If they don’t have to manually plug in every transaction. Now, I’ve had multiple kinds. I’ve had one where I actually kind of liked the manual aspect of it. But really, where it got annoying to me was if I spent 99 cents on a cup of coffee, I don’t want to have to whip my phone out-

Josh Robb:

And put it in.

Austin Wilson:

Or my computer and put in that I spent 99 cents on a cup of coffee because it’s irrelevant at the end of the month, 99 cents. So, these apps just do that for you, which is kind of handy.

Josh Robb:

Now, if you buy 100 coffees at 99 cents-

Austin Wilson:

That adds up.

Josh Robb:

It does add up.

 

[16:28] – Tip #9: Use Credit Cards to their Full Potential 

Austin Wilson:

But that’s what I would say. And number nine, this is one that I’m passionate about and I’m trying to get more people on board.

Josh Robb:

You like it. You like it.

Austin Wilson:

Credit cards. We talked about them. They are extremely useful if you use them the right way. It used to be a lot of rewards points and perks and stuff like that. Now, it’s transitioned more to cash back and things like that. I say cash back is something that is not something you were counting on to begin with, so one option to do is spend it, right?

Josh Robb:

Yeah.

Austin Wilson:

That’s a fun way to do it.

Josh Robb:

Extra money.

Austin Wilson:

It’s extra money. Another thing you could do is pay off debt. That’d be a great way to do that. But my personal favorite, if you’re in a financial situation where you can, is to not ever see it.

Josh Robb:

Oh, there you go.

Austin Wilson:

So, you have your cash. Right now, this is not an endorsement, but I have a cashback credit card from our custodian. Fidelity is who we use, and it automatically takes my cash back and invests it into my Roth IRA.

Josh Robb:

There you go.

Austin Wilson:

So, I never see the money. I don’t spend the money. It’s invested.

Josh Robb:

There you go.

Austin Wilson:

So that’s just a way to automate even more savings. Now, you do need to be conscious of how much you’re putting into this tax advantage to accounts like that.

Josh Robb:

I’m sure you could choose taxable accounts too.

Austin Wilson:

You can, yeah. Or HSAs, or anything. But that is one way. If you never think about it, if you don’t need it, throw it in your investment account.

Josh Robb:

There you go.

 

[17:47] – Tip #10: Work with a Financial Advisor 

Austin Wilson:

That’s one way. And number 10, Josh, probably the one that you are most passionate about is how do you automate for financial success? It’s probably to work with a financial advisor. So yeah, tell a little bit about why that is such an important aspect of someone’s financial plan.

Josh Robb:

This whole process, and any of these things that Austin must talked about, are delegating. You’re turning over something you needed to do. And since this automating is happening automatically, but you’re delegating that out to software, delegate some of the stuff that you need to do for your financial plan to a financial advisor. So have someone step in and help, which all these things are to help you be consistent at the process, make it easier for you. Having a financial advisor makes a lot of planning easier. They help you invest your money. They talk through the planning side of things, taxes and insurance and estate and retirement, all those things.

Austin Wilson:

You mean things like what to invest in.

Josh Robb:

Yep. Yeah. And so having an advisor will help you make sure that when you are making these decisions, it’s the right decision for your goals and where you’re trying to go. And if you don’t have one, you’re always welcome to reach out to us. Go to our website, click “Contact Us” and send us an email at hello@theinvesteddads.com, and we would love to talk with you.

Austin Wilson:

Yeah. So that is 10 ways that you can automate your financial situation to really set you on a really good path to succeed financially.

Josh Robb:

Yes.

Austin Wilson:

So, thank you for listening. Thank you for being here this week. This is always a reminder that if you have someone who was asking, “Hey, I feel like I’m missing bills,” or “I’m missing things here and there,” or “I want to get better at finance,” just share this episode with them.

Josh Robb:

That’s right.

Austin Wilson:

So that would be great if you could do that. As a reminder, always subscribe. We’d love it if you subscribed if you’re listening to this. And leave us a review on Apple Podcast or Spotify if we have provided some value to you. And as a reminder, we’re also very active on our social media. So, we’re on Instagram, Twitter, and Facebook. Find us on there. Follow us, like us, and we will talk to you next week.

Josh Robb:

All right. Talk to you later.

Austin Wilson:

Thanks. Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click “Subscribe,” and don’t miss the next episode.

Josh Robb and Austin Wilson Work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.