In our modern world, there are plenty of things out there that can cause stress. At Astra, we are working to make personal finance as stress-free as possible through the use of automation. With that in mind, here are a few tasks that the people in our office have completed in the last few weeks to make personal finance one less thing to worry about.
Autopay on Credit Cards
Autopay seems like a simple thing, but this functionality can save you serious headaches. If you are like me, you roughly know when your bills are due, but they don’t necessarily live on a calendar. I also make a point of paying my credit cards down as quickly as possible, although I sometimes leave a balance from month to month. Forgetting a payment can result in a pretty meaningful late fee and could even ding your credit score. By simply logging into each of your credit cards’ websites, you should be able to set up autopay. I have my autopay set to pay the minimum amount each month on the due date. I go in and pay down my credit card balances throughout the month at amounts that exceed the minimum, but if I get distracted (looking at you COVID-19) and forget to pay my bill, I will be saved by the minimum auto payment I have in place.
Recurring Expense Review
It’s not the most entertaining exercise out there, but going through your recurring expenses to see if there is something you might have missed can yield some real savings. It’s like finding money!
The first step is to log into your bank accounts website. If you use more than one credit card or debit card for your expenses, you will need to complete this task multiple times. But for this example, let’s say you only use one card. Nearly every bank provides a way to “download transaction history.” This differs slightly from bank to bank, but when you find the location on the site, you will want to look at a 2 year time period for data. Next, you will download this data set as a CSV (comma-separated value) file, which you can then use in Excel, Numbers, or Google Sheets.
At a minimum, your new data file should have the following fields:
The description will probably be whatever data was captured at the point of sale but could be the seller’s name or location. The key here is that you can tell what these charges are. The next step is straightforward – you sort the file by “amount.” The trick in using the amounts instead of the seller name is that the name of the vendor might change over time, but most of the time, they will charge you the same recurring figure. When you sort the list, the recurring charges should become very clear. Next is a quick audit, where you go through and confirm that you want to keep paying for each of the recurring charges. I have personally found $25 recurring monthly expenses that I missed, which added up to a whopping $300 per year! Our bet is you can find at least one fee you don’t think you should have. Canceling it will feel great. Free money!
Savings Account Setup
Financial security can be a great peace of mind, and as part of a larger financial picture, everyone should have some funds stashed away for a rainy day. Although I am not suggesting that you keep actual cash around the house, I do mean that your funds need to be in dollars and not held in financial securities like stocks when I talk about emergency funds. The main reason to hold some funds in cash is that stocks and other financial instruments can take longer to access your money, and in a real emergency, every minute counts.
If you already have a savings account, now is a great time to look at how you are funding that account. Are you putting in money every month? Did you put some funds in there a long time ago and haven’t touched them since? However you choose to fund it (Astra has some powerful tools for that), make sure that you are setting aside enough to help you out of a tight spot. If your family size grows, if you change housing situations, if kids go off to college – all of these things should reflect in your emergency fund. Take a few minutes to look at your situation, and the funds set aside and make adjustments as needed. Being proactive now can reduce a lot of stress in the future.
If you don’t have a savings account, it’s a great time to get one. Without leaving the comfort of your home you can now set up an online savings account in as little as a few minutes. We recommend that you set up an account with some return if possible, with the understanding that most savings accounts have a yield that changes with market rates over time. Even if the account you select has a very low rate now it might improve in the future.
The importance of setting up a savings account is just as much about getting a low-risk return on the money you keep there, as it is about the psychological impact of dividing up money.
The trick with money is this: all money is the same, but all money shouldn’t be treated the same.
What does that mean? In short, most of us keep all of our cash in our checking accounts. Mixed in that balance is everything from emergency money to the funds for rent and food. We see the value of that account, with all of the various expenses all mixed together and it makes us feel better about our financial situation.
In our heads:
In reality that math doesn’t add up. Although your checking account balance might say $2400, most of those funds are going to be spent on financial obligations like rent in the near term and aren’t available to spend on something like a bike.
By setting up an external savings account, you remove the temptation to include the balance from that account in your “amount I can spend on a bike fund,” which is ideal. The funds in your emergency account should only be spent as the last resort, so moving them outside of your main checking account can ensure that they are there when you need them.
If you are looking for a new account, these resources are a great way to start (we don’t receive any compensation for recommending these sites). Make sure and check what the minimum balances and rates are before you sign up to ensure that the account will work for your scenario.
Knowing how much money you have in every account is vital. Trying to spend money that isn’t where you left it can create anxiety, especially if it’s an emergency. You could diligently check the balances of all of your accounts every day, but that can be time-consuming and frankly overkill. At Astra, we developed another option for keeping tabs on your accounts – the Balance Threshold notification. Through the Astra mobile application, you can set a lower limit (let’s say $1000) for an account so that if your account ever goes below that level, you will receive either a push notification or an SMS. No more checking balances, simply get alerts when it’s time for you to take action.
We hope these tips from the team at Astra help a bit with your personal finances. If there are other features or tools that you would like us to work on please drop us a note – we are here to help!
Have fun – be safe!