Automate your savings and investments
This article ends a 3 series set which talks about setting up savings and investments and how to automate the whole process so you can sit back and enjoy the benefits without having to think about the process again. The first two posts – Start saving money now and 3 Step Plan to Financial Freedom both talked about how to start the process of saving and investing with only a little about automating the process. This post will go into more detail about easily automating the process to make it all happen very easily. I couldn’t resist the photo on this post of the ultimate in engineering efficiency and automation – the Leipzig BMW car manufacturing factory. Everything there is meticulously organised, clean, efficient and built mainly by robots on a mechanised moving assembly line.
Think of your finances like a car assembly plant
We need to think of our finances as a process rather than a chore so that they can be automated so we can get on with other aspect of our lives. Everybody knows that life can become complicated and the less time we have to worry about the nitty gritty, the more time we can spend with family and friends. BMW invented their automated system to spend less time making each car, increasing their profits and allowing their employees to spend more time doing what they enjoy.
I’ll try to make the system as easy to understand as possible by creating a diagram below. Each person will obviously have a varying lifestyle and different expenses but the system should remain basically the same. You need to automate the bills, the savings, the investments and end up with a system that you can adapt to your life.
I mentioned in previous posts that the amounts (percentages) of wages put aside in the different accounts and categories can vary but I have put a guiding amount below for you to follow. If you think you can afford either more or less just vary the amounts.
How much should I aim to save?
As you can see below I have designed this system so you divert at least 5% of your wages to things you are aiming to save for such as a car or holiday and I would also like everyone to aim for 10% of wages to go to future investments (share market, Real estate etc).
→ Superannuation 9-12%
Paid by employer.
High interest Savings acc. – 5% ←
Holidays, Saving for car, etc.
Everyday savings acc. 90-95%
For distributing money to other accounts.
→ Investments – 10%
(Most initial investment $5,000 but then additional minimum $100 via BPay)
→ Utilities or any other bill that can’t be paid with credit card/debit card.
No if’s or buts – just do it !
This system above should be easy to understand and implement and will go a long way to making your life easier if you follow it.
The only thing to do now is start! Go away, think about it – talk about it and start it as soon as possible. As this is my first post for 2015, think of it as a New Years Resolution (among others you may have). This one though is very important and I hope you take it seriously.
Thanks again and have a great 2015.