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Why It's Good to Automate


"Sometimes hard stuff needs to be done in order to make the stuff you love possible."

-Leo Babauta


I'm sitting down at the kitchen table with my stacks of bills, my checkbook, and a book of stamps. I'm in college and money is tight. I sit down to pay my bills once every couple of weeks, but I use a complicated system to decide when to put the envelope in the mail. It was based on 1) how much money I had in my account, 2) when the due date was, 3) the due date of the bill, and 4) how long I thought it would take for the check to clear. It takes a long time, and it's stressful to look at my finances all the time.

Fast forward to today, I don't pay bills anymore - not really anyway. I have nearly all of our bills automated. This allows us to use the time that we used to spend paying bills and use it to live our lives. I still check in every month to make sure there are no surprises, but automating bill-paying has increased our lifestyles.

Making Decisions

To understand why automating financial decisions is beneficial, it's helpful to first discuss how our minds make decisions. Think of your mind as being divided. You can think of this as being the conscious part of your mind and the subconscious part of your mind. Another way to think about it is to think about your brain as having an animal component. This is the part of the brain that acts automatically and has a strong interest in survival. On top of the animal brain is the rational, thinking brain. This is the part of the brain that we identify with as "us." This is the "you" that feels like it's making your decisions for you.

My favorite analogy comes from psychologist and professor Jonathan Haidt. He describes the more ancient, primitive part of your brain as an elephant and the rational, logical part of your brain as a rider.

our mind is like a rider on an elephant

Most of us believe that the "thinker" is making most of our decisions. Since the rider is who we associate with as "us," it makes a lot of sense. Yet, most of our decisions are made without conscious awareness. You are automatically reading this paragraph, as you're reading this paragraph you are breathing. You're listening to the sounds around to make sure nothing is out of place. Your peripheral vision is making sure nothing sneaks up on you. And you might have a coffee mug in your hand, but you don't remember grabbing for it.

The elephant makes nearly all of our daily decisions (about 95%, but as much as 99%!), most of which happen without the rider even knowing about it. Further, the rider is good at justifying behaviors. If I asked you why your coffee mug is in your hand you would tell me because you need caffeine and the coffee's at the perfect temperature right now. But that's not true. It's because your hands were cold, you tend to hold your mug when you read, or because you like the smell of it. The rider simply doesn't know the real reason the elephant makes decisions.

only about 5% of our decisions are made with conscious awareness


Let's talk about habits. Habits are actions we take that are essentially automatic. If we do something without really knowing why we're doing it, that's called a habit. With habits, you get to take advantage of the fact that the elephant makes most of our decisions.

Think of starting good habits as training your elephant.

habits happen when we train our elephant to make good decisions for us


Willpower is willing yourself to make a decision. Think of willpower like the opposite of a habit. In effect, making decisions with willpower is like having the rider try to do something the elephant doesn't really want to do. It can work, for a while, but willpower is limited and finite. If we use willpower to make financial decisions - like not going shopping - then that willpower won't be available in another area of your life - like overeating. It works the other way, too. If you use your willpower avoiding too much food, that willpower won't be available when you have an urge to go shopping.

The rider has some control over where the elephant goes (in times of low stress), but it takes a lot of work and makes the rider tired.

relying on our rider to make decisions costs willpower


You can have your elephant make your decisions (including habits), and you can have your rider make decisions (willpower). There is a third way to make decisions that rely on neither the elephant nor the rider, it saves time, and it saves willpower. This magic potion is automation.

With automation, you (both your rider and your elephant) have to spend some time up front making deliberate choices about what you want to happen. Care needs to be taken to ensure the system works as you hope.

But, once you have your automation in place, those decisions will happen without a choice having to be made going forward. Most people in the world do not want to be personal finance experts; they just want to make sure their money is being handled properly. Automation gives you both.

Some examples of things that can be automated are a) contributing to your retirement account at work, b) transfer money from your checking account to your savings account, c) paying your bills, d) increasing your savings rate, e) reinvesting your investment income, and so on.

with automation, neither our rider nor our elephant has to make a decision


Be aware this is not a ticket to "set it and forget it." There are some considerations. Automation is not an avoidance technique. So, while it's true that you are setting up a situation where you don't have to check in on your finances as much, the goal is financial success, not financial denial.

Once you set up your automation system, take some time to check in on your system. Every week, every two weeks, every month - whatever works for you - check in to make sure the system and automations are working properly. Make any tweaks that are necessary.

automation doesn't mean set-it-and-forget-it; we have to check in on our systems

Automation helps you by not draining your willpower in areas of your financial life that can't be turned into habits. If the thought of having to log into spreadsheets, analyzing your bank statements, or tracking every dollar seems daunting, spend some time to figure out what you're doing now (or wish you were doing now) that can be automated. What areas of your financial life can be automated?

You only have one life. Live intentionally.

Why It's Good to Automate
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Related Money Health® Reading
References and Influences

Dan Ariely, Jeff Kreisler: Dollars and Sense

James Clear: Atomic Habits

BJ Fogg: Tiny Habits

Jonathan Haidt: The Happiness Hypothesis

Daniel Kahneman: Thinking Fast and Slow

Klontz Consulting: Exquisite Listening Workshop

Sarah Newcomb: Loaded

Moira Somers: Advice that Sticks

Note: Above is a list of references that I intentionally looked at or thought about while writing this article. It is not meant to be a definitive list of everything that influenced my thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.


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About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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