The Transformative Power of Personal Finance Automation

personal finance automation

Whether they’re running a business, advancing up the corporate ladder or investing in the stock market, almost everyone can agree that financial security is a key motivator in their professional life. Unfortunately, between credit card debts, student loans, rent and a whole host of other expenses, it can be hard to stretch your paycheck far enough to achieve that tantalizing objective.

Don’t worry, you’re not alone! A recent Federal Reserve study shows that a staggering 40% of Americans would be unable to cover a $400 emergency expense. A further 39% admit to having absolutely nothing saved for their retirement. With statistics like these, you have to ask; why is it so difficult to master your personal finances?

It’s Not Just Your Income

Of course, your take-home pay contributes to your ability to make good financial decisions, but it’s certainly not the only factor. While real income growth has stagnated to 1.5% over the past decade as costs of living have skyrocketed, these exact economic forces are present in a number of other regions including Australia, Japan, South Korea, and Europe too. Yet the U.S manages to rank behind all of them in terms of financial security. It’s obvious that it takes more than a six-figure salary to secure your nest egg.

The System Makes it Hard to Succeed

Financial advisor after financial advisor will tell you that saving money is all about willpower. Just prioritize your expenditures, cut out unnecessary luxuries, and draw up a budget that ensures your most high-interest debts get paid off in time. Simple, right?

Not really, the truth is that you have an overwhelming number of financial decisions to make on a daily basis, from deciding which loan to pay off first to figuring out whether you should be investing in a new real estate venture. In the midst of all this, there are a number of recurring expenses that you have to juggle as well. It’s no wonder that the average individual can find it difficult to juggle these demands.

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At the same time, you have a variety of outside influences that make it incredibly hard for you to exercise good judgment. Every second you’re subjected to a sophisticated array of marketing messages on your smartphone, laptop, television, even just walking down the street. In our consumerist culture, spending is encouraged and conservative habits are derided as cheapness.

  1. Unlike other income matching programs, the U.S 401(k) allows for early withdrawals without any penalties.
  2. Various studies have shown that lower-income groups are more likely to spend big on visual signifiers of wealth in an effort to gain social respect and access to better professional opportunities.
  3. Savings rates have actually fallen in line with growing income inequality. It’s human nature; as the rich get richer and show off more of their spending habits, you’re compelled to follow suit despite lacking the necessary funds.
  4. Impulsive spending feels great! It might be taboo to say, but the rush of endorphins from a big-ticket purchase is difficult to match with the far-off benefits of prudent financial management. No wonder that an average adult spends an average of $324,000 on impulse purchases over the course of their life.

How Automation Can Help

At its core, automation is about simplicity. It’s about whittling down the sheer volume of financial decisions you make in your everyday life and executing them in a clear-headed, objective manner. These are the principles that of solid financial management.

Instead of worrying about what you’re spending money on, or how much you have left in your bank account every month; finance management apps give you the assurance that you’re making the right decisions every time. With pressing expenses paid off and perhaps a little extra in the bank account every month, you now have the control you need to make better strategic decisions. That means you can actually think about how to invest your money and make it work for you rather than stressing over whether your bills are going to be paid at the end of the month.

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With a financial management app, you can finally put all those personal finance strategies that you’ve been meaning to implement into place, automatically. Things like:

  • Contributing 15% of your take-home pay to retirement funds.
  • Establishing an emergency fund that covers 3-6 months of your salary.
  • Setting up a savings schedule for your long-term goals ( a new home, a car)

This software integrates with your existing bank accounts and cards and produces all the necessary calculations so you’re able to apportion your family’s income in the most effective manner moving forward. The best part is, that you don’t have to rely on willpower at all. There’s no need to build good habits because these apps will make sure that they’re already in place.

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