This is a secret formula to get more money and time: Automate + Unautomate + Reautomate. What do I mean by that?

Automate the good stuffs so they keep going, unautomate the bad stuffs so they don’t keep coming, reautomate so you know you’re on a good track.

Your financial situation changes, your business might take off in a new direction and suddenly your income doubles. Or if you’re unlucky, you might get laid off (full movie here) and your income just drops to zero.

As much as I want to think that I’m different, I know I’m not. You should think the same way too. Don’t make assumptions about the future because no one knows what happens. The economists who claim that they do are idealists, and totally impractical for the philosophy we hold in this blog.

Ask your parents if they wished they had known something 10 years earlier. I’m pretty sure the answer is yes.

Automate Your Savings and Investing

Why should you automate? Because we’re all lazy, especially when it comes to personal finance.

You work really hard at your job, often staying late to finish up the work. So, who STILL wants to spend time working on the savings and investing?

Nobody.

Yes, nobody wants to work on these. That’s why you should automate the process, so you can have more time to do what you love to do and not worry about it after it’s set up.

Set up Multiple Savings Account: HSBC Advance vs ING Direct

I now use HSBC Advance (formerly known as HSBC Direct) to automate my savings every month, and Chase Checking for my automatic investing. You probably know about ING Direct through my free report already.

The reason I used ING Direct in the past was because it earned me some good referral bonuses (hey every bit helps when you’re a poor college student!). And I switched to HSBC Advance because historically it’s given out a higher interest rate compared to ING. [But they both stand at 1.10% APY now.]

ING Direct actually has a better user interface compared to HSBC Advance, but I won’t complain too much.

Here’s how you can set up your automatic savings account for HSBC Advance:

1) Go to the HSBC Online Savings application page and click on “Sign Me Up”

2) Review the terms and disclosures and click on “Apply Now”

3) Enter your personal info and bam! You’re done.

4) Repeat the same process if you want to add more accounts (tedious yeah, but you only need to do it once). Here’s mine:

Once you do that, stop! Don’t stress yourself for now. We will review the detailed process of setting up automatic savings and investing in the next few lessons. The important thing is to get started and do something, not overwhelm yourself with a bazillion things to do. I will explain more on the investing aspect in future lessons, and that’s where you’ll make tens of thousands of dollars.

Why not only have ONE savings account?

Some people like to simplify matter and have only ONE savings account, after all the total of the money you have is the same right? I don’t quite buy that for a few reasons:

1) You need to keep track of what percentage of the money goes to what savings (wedding, house, etc), which requires a spreadsheet or some sort. It’s too manual and requires discipline, which we don’t always have.

2) Keep it simple stupid.

3) Don’t make me think.

Unautomate Your Expenses

Do you use Netflix? I used to.

How many times you ordered DVD from Netflix each month? Maybe three? One? Or Zero? If everyone ordered and watched movie every day using the popular $8.99/month plan, Netflix would most likely go bankrupt.

If you fall into the category of people not watching any movie and you’re paying about 9 bucks every month, it’s time to cancel the subscription.

9 dollars might not seem a lot at first, but if you do the math, it’s $108 a year, $1080 in 10 years, and $43,200 in 40 years! If you look at it that way, wouldn’t you want to spend the 9 dollars on something that you truly care about?

Not to mention, there are many other ways to watch movies for free:

1)      Hulu

2)      Youtube

3)      Veoh

Of course, it doesn’t only apply to Netflix, because if you love movies, you SHOULD subscribe to Netflix. But it could be a membership subscription costing you $97 a month that you don’t use. It could be that overdraft fee that you incur every month that you don’t bother calling to waive it. It could even be the tax deductible commuter credit card that you never bothered to get!

And I’m not suggesting to cancel all the subscriptions. I have at least 3 subscriptions that cost me more than $50 a month, but they are stuffs I am really passionate about and I believe they’re well worth the money.

The important thing is to be conscious of your expenses instead of letting them run wild by themselves.

Reautomate for Maximum Returns

Revisit your automation process every 6 or 12 months and see if things make sense for you. Things can change quite a bit (think of the promotion, raise, and freelance income). Here are 3 steps you should use to reautomate:

• Identify your recurring expenses from month to month. Just think for about 3 minutes. Do you use all of them? If not, cancel them and kill the expenses. You can always spend on them later.
• Determine the dollar amount that you’re saving and investing for. Do you think you can add more dollars to it? If yes, do it.
• Calculate how much returns you’re earning from this exercise in terms of monthly cash flow. You’d be surprised. This step is also important to give you motivation in doing the exercise consistently. You’ll be motivated by how much progress you make.

On a side note, to make sure you remember to reautomate every 6 or 12 months. Set a reminder in Google Calendar and make them repeat forever. Fortune 500 companies do this probably every month, or every week!

Here’s my event on Google Calendar:

A well designed financial plan will get you much further in your journey to financial freedom, and it is what this blog is all about. As usual, feel free to leave your comments and thanks for hanging out!

The Personal Finance School Series:

1. Personal Finance School: An Introduction to Effective Personal Finance

2. Cash is King, Net Worth is Queen

3. Why and How You Should Kill the Debt Monsters

4. Personal Finance Automation: The Art of Doing Nothing with Your Money, or Not?

5. How You Can Spend, Save, and Earn Half A Million Dollars

6. Your Money Will Work for You 24/7, If You Are Willing to Work FIRST

7. Why Investing Deserves Another Round of Lesson

8. The Most Important Personal Finance Lesson of All…

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