Put Your Finances on Autopilot

When you lived at home, your biggest financial concern was probably how to spend your weekly allowance. Now that you're on your own, you've got a slew of new financial responsibilities. You have to pay for utilities and other household expenses, manage your credit cards, pay off debts such as your student loans and car loan. Plus, you know you should start saving for a rainy day and investing for your future.

It would seem to take an organization freak with no life to keep track of everything and remember to make on-time payments.

But I admit even we freaks have a hard time. Ever since cutting the financial umbilical cord to my parents at age 18, I have been an organization nut when it comes to my money. (My desk is another matter.) I keep a strict filing system, and I've customized an Excel sheet to build my budget and track my spending each month. But I found that no matter how strict I was about my system, I'd still lose track of a bill here and there in the pile on my desk and scramble to the post office for stamps at the last minute. And I never seemed to have enough money left at the end of the month to stash away into savings or investments.

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So I decided to go automatic, and you should too. Now I never misplace a payment, I always have enough money to make regular contributions to my savings accounts and my Roth IRA, and the only reason I go to the post office now is to mail Christmas presents. I spend less time fiddling with my finances and more time doing what I want. Here are six ways you can simplify your life and put your finances on autopilot.

Simplify your life

1. Deposit your paycheck directly into your bank account. Not only does this save you a trip to the bank each pay period, but it keeps the money from creating a temptation in your hot little hands (and it guarantees that you won't accidentally toss your check in the laundry with your pants). Plus, the money shows up in your account the day the check is issued, even if you're out of town or home sick. Most employers offer direct deposit. You just need to fill out a form in your human resources department and provide a voided check from the account into which you wish to have your money deposited.

2. Save without thinking. You may have the best of intentions to start saving, but by the end of the month, all your money is spent. The trick is to pay yourself first -- without having to make a conscious decision to do so. There are two easy ways to do this: Arrange with your employer to directly deposit a portion of your paycheck into your savings account and the rest into your checking. Or, make the arrangement through your bank. Consider setting up a high-yield online savings account through Emigrant Direct, HSBC Direct or ING Direct. You link these accounts to your checking account at your regular bank, and you can set up recurring fixed deposits from one account to the other. Just set it up once and forget about it. You won't even miss the money.

Participating in your employer's 401(k) is another great way to save without thinking. You arrange to have a portion of your pay diverted into an investment of your choice. And as an added bonus, the money you stash is taken out before taxes. See Save Now, Retire Rich for more information.

3. Stop paying your bills -- by check, that is. You can pay most recurring bills automatically -- including credit cards, utilities, phone lines, cable and student loans -- without having to mess with deposit slips, stamps and envelopes. Plus, you'll never miss a payment. Everything sticks to the schedule you set. You can arrange for automatic bill-pay directly with each company. That can be time consuming at first, but it's usually free. And once you've got it set up, you can forget about it.

An easier way is to consolidate your bill paying with a single service from your bank, credit union or broker, or go through an online provider such as AOL, MSN, Quicken or Yahoo. Make sure you read the fine print about fees, though. Some may provide the service free with no strings attached. Others may require a minimum account balance or regular bill-paying activity to waive fees (typically $5 to $10 per month).

4. Track your spending. You don't have to be an Excel whiz to craft a budget and watch where your money goes. Wells Fargo Bank, for example, provides a free online spending report for customers. It tracks your online bill payments, credit and debit card purchases then divides them up into 20 categories for you to see where your money is going. It works like a de facto budget, and you don't have to waste time sorting through receipts and categorizing every single purchase yourself.

Microsoft Money or Quicken are popular software programs that'll help you do the same thing. You can link them to your banking, investment and credit card accounts to download the necessary information. They also offer a bill-pay feature to help you set and forget your payments.

5. Get the right investment mix. If you want to invest but you don't know where to start -- and you don't want to spend a lot of time managing your account -- go with a so-called target fund. These funds are a concoction of different stocks and bonds that give you the right investment mix for your age and time frame. As you near your target date (say, for retirement), the fund automatically tones down your risk level to make sure you maintain that ideal mix. See Real Simple Investing to learn more.

The T. Rowe Price Retirement series is a good place to start because it will let you invest as little as $50 a month when you arrange for automatic contributions. Vanguard Target Retirement fund and Fidelity Freedom funds are also excellent choices. Pick one with a target date closest to your expected retirement, arrange with the company to contribute a fixed amount to the account on a regular basis, then sit back and let it ride.

6. Get free money. There are tricks you can use to get more out of your budget each month (see 20 Small Ways to Save Big). But one that doesn't require any work on your part is using a credit card with rewards. Go about your daily spending business, and you could rack up a cash rebate. For example, spend $80 a week on groceries on a card with a 5% cash rebate, and you'll earn about $200 back in a year.

If you don't have much of a credit history (or any at all), you may not qualify for a rewards card. But once you have a history of keeping your financial obligations, shop around for a good offer and let the free money flow in. (Learn more about how to build your credit from scratch.)