End of the year reviewing and looking at the ways I cut back and saved money this past year. Sometimes it dosent feel like I have saved or gain ground financially but looking back there have been some concrete savings made.
Automating the Savings
The biggest one has been automating money transfers that when I did manually (keyword here is WHEN) I would often forget to do it on schedule or not do it at all, and that caused bigger headaches.
For instance a biggie is income taxes. Being self employeed I don’t have someone withholding for me. In the past I’d just wait till taxes were due then start to panic, scrambling to find the money. This year I had an auto transfer to an ING account each week so now when April 15th rolls around I will (hopefully) have enough set aside to cover it.
Another would be or home insurance. We dont have an impound account so we are responsible for the payment twice a year. In the past of course out of site out of mind till it came due, then scrambling to try and find the money. This year we set up an automatic transfer at the beginning of the month of $100 from each of our accounts to an ING account. So not only was it being put aside without having to think, but it was earning a wee bit of interest (and I mean a very little wee). So with the due date next week I have already transferred the money from ING to my checking and Im ready to pay it, on time even.
So those accounts was setting money aside each month for future taxes. I also automated the savings a bit. at the beginning of the year I set up an auto deposit to my Vanguard IRA account which was then auto dispersed into 4 mutual funds. This was done on a weekly basis so that by the end of the year I would be close to my $5K max. Also set up a weekly auto deposit of $25 to another ING account for the emergency/savings account. I know its not much but honestly if it wasn’t automatic I wouldn’t do anything so its a good thing.
Finally this year I made sure all bills are on auto pay. I n the past I was terrible at making sure bills were payed on time, I was afraid of auto payments because what if I had a bad month and couldn’t pay? Well what would happen is I would forget until I got reminder in the mail with the obligatory late payment fee. So this year I put aside the fears and every bill is on auto pay, thus insuring I will no longer have late fees!
What’s Ahead and Improvements
Continuing on that last sentence, except now I forget to transfer money from the business ti the personal account to cover the auto transactions. I then get dinged with a $25 penalty from the Credit Union. So Im going to look at setting up a minimal auto transfer between the two accounts, essentially a direct deposit paycheck to myself if you will. Its not as easy with the Credit Union as it is with say ING, I have to go through them to set it up or modify it.
Another area where automation will help is with my dividend investment account. I use BuyandHold.com and get 2 trades each month included with my $6 monthly fee. I get so busy and caught up in everything else I often forget to make a monthly trade. So when I don’t do it I not only waste that free trade but I waste opportunity to dollar cost average on my stocks. I hadn’t done an auto transfer before because I liked being able to choose the best stock that month to add to based on current price and ex-dividend dates. Im thinking it may be better to do some sort of auto transfer each month even if it is a small amount. I know I can set it up for auto investment as well but dont know if I can have it auto rotate between the stocks each month or not. I have 5 stocks at this moment so impractical to do a split between all as I would incur more fees.
Lastly I think I may be increasing the weekly savings transfer a wee bit.
What about you? Do you use automation to help with your savings?