Automate Your Finances to Simplify Your Life

It started from a place of passion.

It was the 2012 timeframe, and I had just begun to discover the financial independence, early retirement movement. After learning that a lifetime in a cubicle-prison was not mandatory, I became obsessed with improving my financial situation.

I started working harder, slashing costs, and investing the difference as part of my FI plan. I recorded and categorized every single line item expense, so I could track my spending habits over time.

My month-end ritual was my favorite part. I created a Finance Tracker spreadsheet that I updated religiously. There was a balances tab for tracking my account values and credit card balance. A positions tab, which detailed my investments in their various accounts. Separate tabs for monthly savings, budget, and contributions. A net worth summary.

Every month, I would gleefully enter all of my earnings, expenses, and investments into my spreadsheet. Who am I kidding- I did this multiple times a month. I handled most of my transfers and bill payments manually. This was partly because the transfer values fluctuated, but mostly because I liked to feel like I was intimately involved with the day-to-day workings of my portfolio.

It Became Too Much

I was obsessed with tracking everything and watching my progress, sometimes on a daily basis. Which isn’t necessarily bad, but it was time consuming. I was preoccupied with the daily goings on, when I should have been focusing on the bigger picture.

When Mrs. BF and I got married in 2016, it only became worse. We decided not to combine our accounts immediately. Rather, we opened a joint checking account and a joint credit card. The number of accounts to keep track of nearly doubled, as well as the number of monthly transfers.

Here is what our web of financial accounts and transfers looked like, as of early this year.

Brewing FIRE accounts and monthly transfers, 2016 until early 2018

I color-coded the transfers to show the automated transactions (such as direct deposit) versus all of the manual transfers I would make. I used to make nine separate transfers to balance our books every month- crazy!

Time to Automate Finances

For someone who prides himself as a student of the continual improvement philosophy, this is obviously embarrassing. At first, it was fun to feel like I was at the control board of some big financial machine. But then it became overwhelming, and frankly a waste of time.

A couple months ago, we started working to simplify our situation. We took the following steps to get everything straightened out.

  1. Consolidate Accounts. For some reason I was using two checking accounts, and Mrs. BF had a paltry sum parked in her savings account, earning a few pennies a month. We consolidated our banking to one personal checking account each, plus our joint account.
  2. All Income to Joint Account. We also funneled all of our sources of income (paychecks, rental income, etc…) directly into our joint account. Which made it possible to consolidate our payment sources.
  3. Pay Everything From One Account. We now make almost all of our payments out of the joint account, except for our personal spending.
  4. Automate Contributions. This one is key to the simplification strategy. Based on an estimate of our monthly cash flow, we now automate our contributions to our brokerage accounts and Baby BF’s 529 college savings plan.
  5. Auto-pay Credit Cards. Okay, I’m going to look stupid here. Somehow, I wasn’t aware that I could automatically “pay in full” my credit card balance. I thought I could only auto-pay a minimum payment, and not the full balance. We always zero our balances each month, so I set this up.
  6. Make Additional Principal Payments. This is the only ‘calculated’ move I make now. After all of the bills are paid and contributions are made, I check our joint account balance. Whatever excess we have above a chosen buffer is applied to the principal of our mortgage.

Current Status

Green = good!

As you can see, I’ve managed to automate nearly every transfer, contribution, and payment we make each month. And I have to say that it feels great! No more logging into a dozen different accounts every few weeks to ensure that our bills are paid and balances are maintained. Our finances are finally running like the well-oiled machine that they should be.

More on Our Strategy

Finally, I’ll add a little bit more color on our current setup and investing strategy.

Separate Bank Accounts: If we wanted to further simplify things, we could do away with our personal checking accounts and only use the joint account. I’m sure plenty of families do this, but it’s probably overkill for us. We will maintain separate ‘slush funds’ for our respective vices: Mrs. BF frequents the local consignment shop on a regular basis, and I have a bit of a craft beer/homebrewing obsession. To each his (or her) own!

Mortgage Principal Payment: As I mentioned in my April Net Worth Update, we have been making a small monthly contribution toward our mortgage principal in order to reduce the length of our loan repayment and save on interest payments. Internally we’ve been debating the merits of directing additional funds to the mortgage principal or continuing to put it into brokerage accounts, ie. the “debt versus invest” argument.

I will dedicate a separate post to our decision on what to do with our money and why, but here’s the short answer- we are going to aggressively step up our mortgage pay-down strategy. There are a number of factors at play in our decision. In the end, we’d like to reduce our monthly costs as much as possible before exiting the rat race, and housing costs are our biggest expense at this point.

As for me, I’m spending much less time populating spreadsheets these days. It’s still enjoyable to record our progress and see the impact of our efforts on our fiscal bottom line. But I have way more important things to be doing with my time than play with numbers all day.

Partying at the beach

What do you think about our simplification strategy to automate our finances? Are we doing enough? What would you do differently?

8 thoughts on “Automate Your Finances to Simplify Your Life

  • Great stuff Adam! I like all of you charts. Just like you, my wife and I deliberately simplified our finances (and a lot of our life too) some time after we got married. It was a great way to communicate our goals and values and strengthen our bond at the same time. Plus the automation and simplicity freed up more time so that we can spend more time with each other and worry less about the “less important stuff”. Your baby is adorable. We have a 3 month old! 🙂

    • Thanks for the comment Doc! Totally agree about freeing up more time. I didn’t say it explicitly, but the baby was definitely what has pushed us to simplify our lives. We were spending way too much time on less important stuff (spreadsheets and various other ‘hobbies’) and we realized that we needed to cut the excess to spend more quality time together. Babies certainly demand a lot of attention, but it’s so awesome at the same time, I love it. Good luck with yours!

  • Great Article! I remember I was this obsessed when I found out about FI but not as you haha. My wife and I decided to combine accounts like 3 months in just to make things simpler. I still pay somethings manually just to be in control but I will reconsider after reading this. After all, I do have a little guy will take up that time. Btw, I had no idea you could autopay credit cards in full. Will look into that immediately 🙂

    • See! Maybe I’m not an idiot!? I could swear, back in the day, that you could only auto-pay the minimum payment. Maybe that is how it used to be? Anyway, thanks for the comment!

  • Nice illustrations! Sounds like you’re on the right track. Simplification and automation are definitely the keys to creating and maintaining a sustainable money management system. My wife and I combined finances when we were married, which made things fairly simple in our case. I had also already started using Mint for budgeting and expense tracking purposes as a bachelor, which helped.

    But a few months after tying the knot, we had to make a few adjustments to the system we started with out of the gate. Mrs. FFP is a natural spender and has a low “pain of payment” when paying with plastic, so we implemented a cash envelope system for categories where she did much of the spending to ensure we stayed within budget. We also implemented the concept of “Mad Money”, a specific monthly allotment that we were each allowed to spend no-strings-attached and no-questions-asked. That was a big improvement and helped us avoid financial arguments.

    We ended up creating dedicated savings accounts for large, non-monthly bills or expense types such as property taxes, auto / home / life insurance, vehicle registration, trash removal, vacation, and Christmas gift-giving to enable us to budget and save for those expenses monthly. Using sinking funds for these expense types meant we never had to scramble to make a payment any given month, just had to transfer the funds to checking and pay the bill. Easy-peasy.

    Automating transfers, utilizing paperless billing and banking, and paying bills online all help automate our money management system and keep it low-stress, despite tracking our expenses to the penny. We still use Mint to this day, and while Personal Capital is better for investment and net worth tracking, Mint has it beat hands-down (IMO) for money management.

    • I totally agree about the Mint comment. I still use Mint for tracking our expenses. Personally, I don’t understand why PC doesn’t give people more customization when it comes to the expenses portion of their software, especially splitting and/or adjusting the value of individual transactions. Oh well..

      I like the idea of having separate savings accounts for particular large expenses. We don’t do it yet, because our biggest lump sum expense is only ~$600 (semi-yearly car insurance), but if we had larger payments to make, it would definitely be a good idea. Love the “Mad Money” portion- I think, no matter how disciplined and/or frugal you are, we all should have a small amount of spending money each month that no one questions. As I said, for me it goes right to $12 4-packs of Double IPAs. I couldn’t live without my fancy beer!

    • Haha yes it does look familiar. My wife has never wanted control, she would rather I handle all the money stuff. I just hadn’t gotten around to consolidating/simplifying until very recently. You’ve been blogging a long time, huh? That’s impressive.

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