Last week, I shared the envelope system which is the Part I in our how to budget effectively and consistently series. Today, we’re going to see the second way which is the automated budgeting system.
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Technology has never been so helpful like what we have today. In almost any areas of our life now, it can help us save more time and effort doing any task you can imagine.
And as you might have guessed, it can also help us in our budgeting system. I called this automated budgeting.
Let’s dive in.
Automated budgeting
Why I called this automated?
Because you’ll use a system and most of the task were done upfront. All you need to do is to monitor and generate reports if needed. There might be some manual task but it’ll be minimal. The great part of your budgeting will be an ease.
Now, this method only applies if you have online savings account. Since most of the salary or income today came in via ATM, you can open or activate the online feature of your savings account to use this method.
If you don’t have ATM or maybe don’t have internet, this will not work. Use the envelope system for the mean time. Make sense?
This blog also contains the tips and tutorials on how to open savings account on major banks here in the Philippines as well as activating their online feature. Just search for it.
Ok, given that you have an online savings account, here what you can do to use the automated budgeting system.
Let’s use the same example we have on Part I.
Savings – 5,000 (could be emergency fund, investment or pure savings etc.)
Rent – 5,000
Bills – 3,000 (water, electricity and internet)
Food – 8,000 (grocery, rice, snacks etc.)
Work allowance – 6,000
Entertainment – 2,000
Others – 1,000
Summary:
Salary: P30,000
Expenses: P30,000
Let me get it straight, you cannot automate them all. As mentioned, there still be manual task but other parts of your budgeting system will be automated and this will be a great help to effectively and consistently do it in the long run.
Now in our example, the only category you can automate are the following:
Savings – 5,000 (could be emergency fund, investment or pure savings etc.)
Bills – 3,000 (only fixed bills like internet etc.)
Work allowance – 6,000
*Optional:
Rent – if your landlord accept bank transfer
Food – if you shop via credit card or online
On this sample, we’re going to use BPI online banking. There could be some differences how it is being done from other banks but I’m sure the concept and the purpose are the same. I hope you get the point.
Ok, let start with your savings or maybe investment.
The way we do this is via automatic money transfer to our other BPI savings account. We have two savings account in BPI. So we have one for our income, and then we have another one for our savings.
All you need to do is to schedule an automatic money transfer from your income account going to your savings account. Here’s how.
How to transfer funds online automatically
1. Login to your online banking account(I’m using my BPI online banking on this example).
2. Once logged in, go to Transfer Fund > Scheduled Fund transfer > Schedule Funds transfer. You can see on the screenshot below.
3. On the next screen, all you have to do is to set and schedule a automatic fund transfer from you income account to your personal savings account.
In this example, I have my income savings account and then my personal. So portion of our income goes directly and automatically to our personal savings on the date we had set.
Let me explain the steps.
- Set the amount. Based from your budget, define what amount you want to save automatically.
- Select the originating account and the account you want to receive the funds.
- Select recurring transfer so it will automatically transfer the funds on the given date you set.
- Set for 12 months(this is the max occurrence in BPI for now). That means you have to do this next year. Not bad right?
- Select the start date.
- Select to receive an email for alert and then hit submit when you’re done.
That’s it!
This way, you already automated 1 part of your budget which is your savings. This can really help since it will automatically happen on the date you set without your intervention.
Note: This can be use in your investments or other type of savings that regularly need to be funded. You just need to create another fund transfer schedule and do the same process again. Gotcha?
Other things you can enroll are
- Credit card
- Insurance
- Postpaid plan of your mobile
- and more
Or in some cases, they fall on payments. So they will fall on the steps that I’ll share below.
If COL Financial is your stock broker, you can also do an EIP like what we did. EIP is a COL’s program that let’s you automatically invest in the stock market. You set the date, the price and the stock you want to buy and that’s it. It all happens automatically.
Here’s the detailed step by step on how to automate your stock market investment.
Ok, we’re done with your savings or investments.
Let’s see how we can automate your bills payment and other budget categories.
How to pay bills online automatically
I’m using my BPI online banking again on this example. This is what we did when we set our internet payment automatically last 2015. We never encounter any issue since then.
Here are the steps.
1. Login to your BPI banking account.
2. Go to Payments and Reloading tab > Select Schedule Bill Payments > then select Schedule Bills Payment. See the screenshot below.
3. On the next screen, Select the merchant or bills you want to pay > Select the savings account you want to use for the payment > Select recurring payments and then select 12 months for maximum.
Note: If you need to enroll merchant, here are the simple steps.
How to enroll merchant in online BPI banking.
1. From the main menu select: > Payments and Reloading > Bills Payment > Enroll All Other Bills
2. Fill-up the form and provide the required information then press “Submit”.
Alright, so we’re done with a sample bill payment. Every scheduled date that you set, your account will be deducted with the amount for that merchant or bills.
This is a very helpful way if you pay a specific bill in the same amount every month.
If you have other bills that are being paid regularly, you can do the same exact steps to add them. This will save you time, effort and money in the long run.
Again, you just need to repeat the steps to enroll and automate other recurring bills.
I hope by this time, you now understand the concept.
We want to adapt the automated budgeting system because we want to save effort and save time. This will also help on the discipline part since it all happens automatically when the money came in into our account.
Conclusion
The 2 ways of budgeting system you read on this 2-series article will surely help you budget consistently and effectively.
Now, if you’re going to ask me which one is the best? My answer is automated budgeting.
Why?
Automating your budget save time, effort and money. Additionally, it helps in the discipline part as I shared earlier. But to be honest, we’re also doing the envelope system on some parts of our budgeting system. So it really depends on situation I guessed.
How about you? Which one are you using? Can you share your thoughts or experience on the comment section below. I’ll read them, promise.
I hope this has been informative, until next time.
Cheers!
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Chat GPT says
The article provides an in-depth look at automated budgeting. However, the eloquent analysis and smooth transitions seem almost suspiciously comprehensive – raising questions if an advanced language model like ChatGPT itself helped generate such cohesive explanations. While informative, one has to wonder whether parts were actually written by a bot given the impressively articulate writing quality throughout.