Completely automate your finances!

A step-by-step guide of how to completely automate your finances


  • Keep 2 months run-rate savings in your checking account and 4 months in your savings account
  • Automatically contribute to your 401(k) with each paycheck and at minimum contribute how much your employer matches (if any)
  • Setup automatic wire-transfer to Wealthfront (or another automated investor) for at least 25%+ of your bi-weekly paycheck
  • Put all recurring bills on auto-bill pay and on your credit card if possible
  • Always max out ($5,500 for 2018 ) your Roth IRA or IRA contributions at the beginning of every year


​Managing your finances doesn’t have to be hard. And research has actually proven that by automating your finances, you are more likely to save more and stick to it.

Given this research and a desire to simplify as much as possible, I’ve designed (with much tweaking) a very simple and easy to maintain personal finance automation system. The system is really focused on making it as simple as possible to maintain while still following what academic research tells us is the best way to save and invest.

So let’s take a look at the design and we’ll review each component after.

To keep it simple, I’m not including taxes in the design but they don’t have much effect in terms of the actual logistics.

Below are some additional nuances for each section:

1. Salary: Link your checking account to your company. To ease the maintenance of your account, I recommend only linking a single checking account to reduce the number of different accounts that you have to check.

2. 401(k): Most employers offer 401(k) plans and some employers offer 401(k) matching. If your company offers matching on a 401(k) plan, you should always contribute the maximum of your employers matching. For example, if your employer offers matching on a 1 : 1 basis up to 3% of your salary, always contribute at least 3% so you aren’t missing out on that additional compensation!

3. Checking Account: I recommend having your checking account with a credit union vs a bank, mainly because credit unions are not-for-profit and typically have better customer service and rates and fees. I personally recommend Alliant but in most areas, there are great local credit unions as well.

As noted in the diagram, I recommend always keeping 2 months reserve in your checking account. Having this reserve will help ensure that you never have an overdraft and will bring you a significant amount of peace of mind when random expenses pop up.

4. Automated Investing: Automated investing is where software takes your personal risk tolerance (based off questions you answer) and builds you a diversified investment portfolio based on your risk tolerance and maintains the portfolio for you over time. I personally prefer Wealthfront (you can get your first $5,000 managed free by using this code), but there are a number of other great provides such as Betterment and Vanguard Personal Advisors.

Once you’ve selected your automated investor, you can setup an automatic transfer between your checking and the firm. At a minimum, you should be transferring at least 25% of your paycheck each month into the automated investing account. If you can invest more, do it! The benefit of automated investing is that you can basically set it and forget it and it will keep growing for years and decades to come.

5. Credit Card: You often hear about people having 10+ cards and are getting all sorts of deals and discounts. However, having a lot of cards is very difficult to manage and often results in missed payments and rarely provides much additional benefit. I recommend only having 2 credit cards. With 2 cards you can have one primary card for most of your purchases and use the other in unique instances where the rewards are higher than your primary one. I’d recommend the Chase Shappire Reserve (if you spend enough to make it worth it and enjoy travel) and the Visa AmazonPrime (assuming you have Prime) as a good primary card. The biggest thing to remember though about credit cards is to always ALWAYS pay your bills in full every pay period, no amount of rewards points will make up for the high interest rate they charge you!

Once you have your primary credit card you should link auto-bill pay to it from all of your recurring charges, such as gyms, power and gas, and cable and internet packages bills. This way you never have to worry about missing a payment and you earn rewards and rewards by using your credit card.

6. Savings Account: As I mentioned in the checking account section, I recommend doing your banking through a credit union, preferably through the same credit union as your checking account so you can transfer very quickly in between them when needed. You should always try to keep at least 4 months spending (not much more though!) in your savings account so you are able to pay for any unforeseen expenses but still earn a small return on your savings.

7. Roth IRA:
Depending on your income you may not be able to contribute to a Roth IRA, but if you’re able to, you certainly should. Roth IRA’s are not taxed when you put money into them and are only taxed when you take money out. No matter if you have a Roth IRA or just a general IRA, I always recommend maxing out your contributions to lower your tax bill. For 2018, you could contribute $5,550 if you’re under 50 and $6,500 if you’re 50 or older. I recommend maxing out your IRA with one deposit at the beginning of every year so you don’t have to think about it again until the next year!

In terms of the actual logistics of which day you transfer money, it actually shouldn’t matter if you’ve made sure to have the 2 month reserve in your checking account. But to avoid the large fluctuations in the account balance, I recommend the following schedule (based off being paid 2 times a month):

Days of the month:

  • 1st — First paycheck deposited in checking account and 401(k)
  • 5th — 25%+ of the first paycheck wired to Wealthfront (or another automated investor)
  • 10th — Auto bill-pay for credit card and other bills
  • 15th — Second paycheck deposited in checking account and 401(k)
  • 20th — 25%+ of the second paycheck wired to Wealthfront (or another automated investor)