Automate Your Financial Decisions

Life Balance

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Automate Your Financial Decisions

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This whole site is about setting yourself on a better course financially, so I'm not going to go into detail about the CareOne plans or how specifically to address your debts. This post is to help you think about the bigger picture of reducing the decision-making required to build a better financial life for yourself.

Automate Your Financial DecisionsMake Fewer, Better Decisions

I've written before about the power of making fewer decisions. Psychological research has shown that a person has only so much energy to give to making decisions. Top performers in business, science, athletics, and the arts focus their decision-making power on the things that really matter, and automate virtually everything else in their lives.

For example, the late Steve Jobs was known for adopting the uniform of blue jeans, black turtleneck, and running shoes. But a hundred years earlier, Thomas Edison had similarly adopted the uniform of a gray suit, white shirt, and bow tie. He had many copies of the suit hanging in his closet, so he never had to think about what to wear. He said that he'd rather be thinking about his newest invention.

You may not choose to wear the same thing every day, but when it comes to your finances you should choose to do the same things, day by day and month by month.

Solve Every Financial Problem Two Ways

One of the simplest ways to automate your financial life is to set up automatic electronic payments for your bills. When you do this, you're following the old engineering tenet of solving a problem two ways:

  1. For today -- by paying this month's bill
  2. For the future -- by setting up a mechanism now that pays all the bills to come

You can do the same thing for savings goals you're trying to reach, as many people do with 529 accounts for their children's college education. You could make irregular contributions -- such as when you receive a year-end bonus or some other windfall -- but the best way to keep up your momentum is to make small monthly payments to the 529 that are deducted automatically from your bank account. Again, you pursue your goals two ways:

  1. For today -- by setting up the account with an initial contribution
  2. For the future -- by setting up a mechanism that adds to the account each month

The same thing applies to your 401(k), your debt-relief plan -- you name it.

Decide Once, Act Once, and Stay the Course

The key in all of this is stick with it once you've made the right decision. For whatever financial problem you're trying to solve, consider your options, settle on the best one -- or the one you can live with the easiest -- and then stick with it. Automate it so that you don't have to think about it anymore.

From then on, all you need to do is to review progress and make sure the figures work out in your overall budget. For instance, you may find out after a few months of results that you've allotted too much to savings and not enough to debt reduction. When that happens, don't go back to making a lot of ad hoc decisions that waste your precious time and energy. Instead, just make a single course correction -- a single decision -- and automate accordingly.

It requires patience. You're taking the way of the tortoise rather than the hare. But it's the only way to win in the long run.

What are you doing to automate your financial decisions?


Tim Walker, Life Balance Blogger for CareOne Debt Relief Services Tim Walker

Tim is a writer, marketer, and social media pro living in Austin. He joined CareOne's blogging team as a contributing writer for the Life Balance blog in 2009. As a blogger who has personally overcome debt challenges, he draws from his own experience to provide tips on living a balanced life and keeping fit. You can read more of his thoughts (on fitness and everything else) at his personal blog, What I've Learned So Far. Compensated Blogger for CareOne Debt Relief Services.

Follow Tim on Twitter; @Twalk or follow us by clicking here!

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  • One of the great sources of agony and failure, I believe, is the unwillingness to make decisions briskly and stick with them.

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