If you’ve spent any time researching personal finance, you’ll know that there are countless podcasts, blogs, and books promising to give you The Key or The Method or The Secret to financial success. Unfortunately, most of those promises end up being nothing more than a sales pitch for whatever financial product the author is selling.
So, what’s the truth? Is there really a tried-and-true secret that leads to financial success?
Yes and no. There isn’t one specific thing you can do that will guarantee financial success. But there is one “secret” strategy that makes it much easier to reach your money goals. Are you ready?
It’s automation.
Probably not the first thing that came to mind, right? It’s not the latest investment trend or savings strategy. And it’s not something that only works for people with seven or eight figures of wealth. But it is a common theme we see among financially successful individuals and couples.
People who automate their finances tend to reach their financial goals without making money management the entire focus of their life. Automating your finances reduces anxiety about your budget and helps you make real strides toward your money goals.
Automation counteracts financial stress
Why is automation such a powerful strategy? It simplifies your money and reduces the number of financial decisions you need to make. Decision fatigue is a real thing, and it’s something that can severely affect your desire and ability to manage your money well.
Constantly thinking about your money and trying to remember all of the tasks you need complete is exhausting. Add that mental load to all the other things you need to think about (your work, children, partner, and home) and it becomes overwhelming really quickly. The idea that every individual has the mental capacity to continually make great financial decisions on top of all the other things they deal with every day just isn’t realistic.
Automation is a simple solution to financial decision fatigue. All you have to do is make the first choice, and then you can automate the task so you don’t need to dedicate mental space to it anymore. You can focus your mental and emotional resources on the things that really matter to you, like your family.
What are your financial goals?
Before you can take advantage of all the benefits of automation, you need to figure out your financial goals. Once you know what you’re working toward, you can make a plan to get there and then automate the steps in that plan.
For example, let’s say your goal is to pay off credit card debt. That’s a fantastic financial goal, but it can be overwhelming if you just look at it as a single piece. Instead, try breaking it down into smaller chunks. For example, one part could be to stop using that card. And the second part would be making a monthly payment that’s a certain amount over the minimum.
Instead of having to go to your credit card provider’s website each month and make the payment, automate it. Once you set up that automatic payment, you don’t have to think about it anymore. You can feel confident that you’re moving toward your goal without having to think about it all the time.
Little steps pay off
You can apply the same process of automation to any financial goal that you have. If your goal is to build up an emergency fund, you can set up automatic transfers to that account each month.
Saving for retirement can work the same way. If your retirement plan is a 401(k) through your employer, the process might already be automated – chances are your contribution automatically comes out of each paycheck.
But even if you manage your retirement investments yourself, you can still automate. Just set up a recurring transfer to move money into your retirement account.
Continually investing that money moves you closer to your goal and it lowers the stress of retirement planning. Thinking about the amount of money you need to save to be able to comfortably retire can be overwhelming – how can you ever save up such a large amount? But when you break it down into smaller chunks, it’s a lot more manageable.
Instead of concentrating on that big number, just figure out how much you need to transfer from each paycheck. Then, automate it, and just watch as those little contributions add up. By the way, you can use the same process to save for a vacation!
Simplifying your finances: take the first step
The most important thing to remember about financial goals is that every little step counts. Making six figures, being debt-free, and being independently wealthy are all great things, but they’re not necessary for financial stability and retirement. Financial success isn’t one of those things reserved for millionaires. As long as you can make a plan and execute it each month, you can get reach your goals.
If you’re not sure which financial task to automate first, take a look at your budget. Don’t have a comprehensive budget yet? Check out BudgetingBlocks™. This program simplifies money conversations with your partner and makes it easy to allocate your funds. Once you know exactly where you want your money to go, you can automate the transactions and simplify your life.