Automated Financial Systems 101

I hope you have seen from the past articles that having a systematic approach investing is very important. The same is true for the rest of your financial life. Having an automated system removes the human emotion and psychology from the situation and keeps us from screwing our entire plan up. In this article I am going to tell you everything you need to know about  putting in place a fully automated financial system that automatically saves, pays off debt, and invests over time. I will be telling you about great apps that you can use to make all of this super easy and can all be done from your phone. Not more big excel sheets and hours of time. It will take you literally minutes to manage your finances every month. The backbone of any automated financial system is the budget. Whether you are a Fortune 500 company or anyone else off the street you have to manage and track your expenses to achieve your financial goals in an efficient fashion. Now most people have a really misplaced hatred with the budget so let's clear that up before we move on to setting up the system.

What Is Budgeting, Really

Most people think of a budget as something constricting. We have phrases like "ballin' on a budget" or people say things like "nope, can't have that it isn't in my budget". This leads some people to avoid the act all together. A budget is really just a plan of what you want to spend in a given time. It doesn't have to be constricting. It is simply being an adult and planning your expenses. John Maxwell describes a budget as telling your money what to do instead of wondering where it went. If you read anything into this paragraph it should be this: we need to separate the act of budgeting/planning our expenses from cost cutting. These are two separate acts that are based on different things. EVERYONE can plan their expenses. If you are a crackhead and you wanted to spend 70% of your income on crack then your budget could look like this:

  • Crack: 70%

  • Food: 10%

  • Cardboard Box to live in: 1%

  • Other: 29%

It doesn't have to be about cutting your expenses. Should this person spend 70% of their money on crack? No of course not. But for doing a budget it doesn't matter. It is just the plan. Cutting costs is optimizing this plan. If you don't have a plan to begin with then how are you really supposed to cut costs? You can't efficiently cut your costs, save money, and invest if you aren't doing a budget. It is just that simple. Think of all the fortune 500 companies out there. They all have INSANELY accurate budgets. They have a very good idea of what they are going to spend in a given year. Now these are money making machines. They don't spend time and money on things unless it has a real impact on the business in some way. So why do they spend so much time and money paying people to keep meticulous budgets on all expenses? Because they know that is the only way they can run their businesses well and help streamline what matters. Your personal finance is no different. It is the ONLY way you can truly get a grip on your finances and take advantage of the awesomeness that is investing and compound interest.

Automated Budget Basics

There are some fundamental characteristics of a budget that we must have:

  1. Must be unique to every month. None of this "let me set some goals and see if I hit them" type shit. That just doesn't work over time. Each month is different and you need your budget to reflect that.

  2. Must plan every dollar of income. That is the most effective way to plan your expenses. I will show you some apps to help you do this.

  3. Must automatically download transactions (Apps). This is one of my personal preferences. I make just about all my purchases using by debit card. Many budgeting apps require you to manually enter your transactions. While that is all great and very easy to do, I just simply don't keep up with it. It is mandatory for me that have my transactions download automatically. Some people like the manual, I just know I won't do it.

Next we talk about finance apps.

Financial Apps

With the dawn of the information age, budgeting has only gotten easier! There are some fantastic apps out there that you can use to not only budget, but also to track all of your accounts and net worth. I will show you some apps that we can use to make this whole budgeting thing super quick and painless.

I separate my apps into two separate categories: budgeting and net worth/investment tracking. So far I haven't found an app that does both effectively. Some will track your net worth and investing well and have a budgeting tool, but it just isn't that good. Some are great with budgeting and do decent in tracking your total financial picture, but just not very well.


EveryDollar Plus

This is the app I personally use for budgeting. Here are some pros and cons:


  • Very easy to categorize expenses on the go. Just drag and drop into the budget category from your iPhone.

  • Automatically syncs to your bank account and downloads transactions.

  • Has decent trends you can look at to track month over month spending.

  • Easily set up a budget using the previous month.

  • Easy to manage on the go with the added feature of editing and adding budget categories from your phone.

  • Encourages you to budget your income down to 0.


  • It does cost $99/year for the feature to connect to your bank account. I think it is money well spent as I hate manually tracking expenses.

  • Transactions are sometimes slow to load. Every once in a while I have to close the app and reopen it to get them to download.

  • It is only supported on the iOS (iPhone) platform. They say it will be available for android in 2016.


I have just started trying this app out. Here are my observations so far:


  • Easy to set everything up. It creates a budget from national averages and goes from there.

  • Automatically syncs to 4 bank accounts for FREE. They have a upgrade version for $95/year that has unlimted.

  • Easy to adjust everything from your phone.

  • Is supported on both Android and iOS devices.


  • With the free version they have some ads that are around online and it pings you a lot to upgrade.

  • Does not have any trends to look at that I can find.

  • Is a bit confusing at first. I am sure once you learn how to navigate it will be fine, but it is just not intuitive.

  • Doesn't seem to easily track your month over month budget like EveryDollar does.

  • Seems to be a bit more cumbersome to move transactions rather than EveryDollar's drag and drop.


If you have an iPhone I suggest the paid EveryDollar app. It is super easy to use and navigate. It has good trending and it is easy to go from month to month. I believe it is well worth the money. If you have an Android or are really against paying for EveryDollar then go with Mvelopes. It still works very well and I am sure once you get the hang of it there will be no problems.

Net Worth and Investment Tracking

Most of these apps are free. I will talk about two very powerful ones

Mint is the most popular financial app by far. It does have a budget feature, but I really don't like it. It is basically you setting goals and the software then automatically categorizes your expenses. Here are some observations from using the app for about 2 years before switching:


  • It is free to use.

  • It has great trending tools to see the breakdown of how much you are spending on average every month.

  • It connects to most institutions and helps keep track of all of your accounts.


  • It does have quite a good amount of ads all around the website and app. There is no doubt how they make money.

  • The software is supposed to automatically categorize you transactions into their respective categories, but it doesnt always do a great job. It is quite a chore to go in and make sure it is assigning everything correctly if you really want a good idea of what your spending is. If you use EveryDollar they have trends you can look at that you don't have to do any extra work to know they are correct.

  • It will track your investments, but doesn't have very much analysis around it.

Personal Capital

This is the app that I personally use. It has a great interface and has some great features that I haven't found on many other apps.


  • It is also free to use.

  • It also has great trending tools to look at your spending.

  • It has a fantastic investment checkup tool that shows you what you are paying in fees. I haven't found this feature in any other free app.

  • Easily track net worth as you pay down debt and invest over time.

  • No ads whatsoever.


  • Could do a little better with the trends.

  • Has a similar issue as with Mint above where it doesn't always categorize your expenses correctly.


Both apps do a good job, in general, with tracking your net worth and investments. If you value the trending functions more that investment analysis then I would go with Mint. If you like the investment analysis more then I would go with Personal Capital. I have both Mint and Personal Capital and I almost always use Personal Capital. It just works better for me.

Creating Your Automated System

With budgeting, and most other financial things, automation is key. Having an automated system that requires minimal work month over month is the easiest and most effective way to reach your goals. I know this first hand. Before I found great budgeting apps like EveryDollar, I really struggled with budgeting. Some months I would do it and some months I wouldn't. I can tell you one thing, every month I didn't do a budget I always spent more and didn't get much for it. Also, you will find that you are much less stressed about your financial situation when you know the details and are managing them. So how do we create a automated system? Well I will show you step by step exactly how I manage my finances every month and how you can do the same. 

1) Set up your apps

First thing you need to do is get your apps set up to get the whole thing rolling. From the above list or from your own research find an app that works for you. Like I said, I personally use Personal Capital and EveryDollar Plus so that is what I will be talking about here. The basics will not change even if you are using different apps. Get your apps set up and get all of your accounts loaded in.

2) Determine your net worth

Once you get your apps loaded up, you need to make sure you gather your entire financial picture. Include all accounts and debt that you have. Your net worth is simply your cash (equity) minus your debts (liabilities). For many people this can be kind of scary at first, but realize that making this first step is the only way it is going to get any better. Financial problems don't just go away over time. They take work and you have to be intentional. Even if you don't have any debt right now it is good to have all your accounts in one place so you can quickly see where you are at.

3) Determine your fixed expenses and put them on AUTO-PAY

Now that we know where we are at we can set goals and start working towards them. First step in automating your life is making sure that all of your fixed expenses are paid on time automatically. Fixed expenses are things like rent/mortgage, utilities, debt payments (cars, etc.), and insurance. These are things that are usually paid all at once and happen at the same time each month. These are easy things to automate and make a huge difference. Most companies now offer automated bill pay through their own systems using a debit/credit card or a bank draft. I HIGHLY encourage you to set these up. Some things, however, still do not have this option. For these you can use the bill pay feature from whoever you bank with. I personally use Chase and use their bill pay feature to pay the minimums on my student loans (which are getting close to being paid off, I will post about that later). The way they work is pretty simple. First you will need to call whatever company you are trying to pay and ask them for a bank account number and zip code to set up auto-pay. Once you have that it is easy to set them up as a "payee" in your banks system. Then you can set up a reoccurring payment every month. Allow time for payments to process before their due date. For example if you have a bill that is due on the 15th of every month, set up the bill pay to go out on the 10th or 9th. That gives time for everything to go through so you don't have to pay late fees. Once you set everything up on autopay you will know that every month you don't have to worry about missing payments.

4) Set up the rest of your budget

Apart from your fixed expenses above, everything else can vary from month to month. This is where the budget and budgeting app comes in. If you set this up correctly this can be a simple and effective way to track where you are at any point during the month and plan for your goals. The hardest part of this is setting up the first budget. If you have never tracked your expenses before then it can be overwhelming to try to figure out how to start. Not to worry, that is where apps like Personal Capital and Mint come in. These apps, once you load your accounts, will automatically go in and categorize each transaction. Although it can take a little more work to check and make sure it does it correctly, it is an easy way to see what your spending habits are. I recommend you go back 3 months and find your average in each category. Once you do this, it is easy to set up your first budget. If you are using EveryDollar then you can go online and easily enter your income, your fixed expenses from above, and your 3 month averages. Here are a couple of very important things about setting up your first budget:

  • Make sure that ALL of your income is accounted and budgeted for. This is the most effective way to budget and forces your to plan your expenses. Trust me this is not as hard as it seems. If you find yourself where you have some money to save then just put the balance in savings. If you are spending more than you making then focus on simple ways to cut expenses so it can balance out.

  • Don't try to do too much cost cutting the first time you do your budget. For many people the first time they really look at the expenses it will be a bit shocking. I have no doubt you will find you are spending more than you thought on different things. A lot of times people will react and attempt to cut too deep the first budget and will bust it or get frustrated and give up. This is unfortunate. For the first time just focus on PLANNING not cost cutting. Once you get a grip on what you are spending and have your system in place it is easier to adjust.

  • Don't get discouraged if you bust your budget at the beginning. Many people who are new to budgeting often underestimate the time it takes to get used to managing your budget. They will go over the first month and get discouraged and just go back to doing whatever. I know because I have been there. Realize that is takes a solid 3 MONTHS to really get it down. Even for the most disciplined person. It's just the way it is.

Once you get your budget set up in whatever app your choose then start tracking your expenses. Hopefully you will see how easy it is to do.

5) Automate your saving and investing

This is HUGELY important. I would be willing to say that most people do not save consistently because they are relying on their own willpower to physically move money from checking to savings at the end of each month "if there is any left over". This is exactly opposite of what you should be doing. I know you have heard it 1000 times, but "paying yourself first" is the only way to do it. Having your savings automatically come out of your paycheck without you seeing it is the most underrated idea in all of personal finance. It is hard to really explain except for saying that in most cases if you don't see the money in your account you don't miss it. It is as simple as that. Once you have your budget set up from above you should know exactly how much you have to save and invest. It can be scary at first to not have this in your checking account "just in case", but trust me that idea is doing more harm than good. I personally have my savings account with Chase along with my checking. I automatically save each and every time I get paid. If I need to make a big purchase that month I can transfer over so it is not like the money is gone. It is just a different feeling when you don't see it in your checking account. Just like setting up bill pay it is insanely easy to set up automatic savings. Just have your account and routing numbers. Once you set it up it the bank will go through a verification process to make sure you are the account owner. At that point you will be able to set up your automatic transfer. It is similarly easy to set it up for an IRA, 401k, or any other investment account.

6) Plan for future purchases and goals

Once you have your automated system set up it is easy to see where you are going and how long to get there. Also, it gives you a clear path of what your money is doing at all times. You can now set realistic financial goals and know exactly what you have to do to reach them. Since it is all automated it won't take much work at all to keep everything on track and you can spend more time living your life! Whether it is a big trip you want to take or a down payment on your first home, it can all be within reach if you stick to your system.

Here is a diagram that explains how the system works:

As your income comes in you have already automated your saving and fixed expenses so those will just pay as they need to. From your checking account you can make all of your purchases and they will be tracked through the budget which is on one of your apps so it is very easy to manage.


Once you have your automated system set up you will see how much easier your financial life is. I have done it both manual and automated and I can tell you that automated is SO much more efficient and effective. I hope you find this guide easy to use and implement. What does your financial system look like? Let me know in the comments below. Next post we will talk about how to cut costs.