In our digital age, managing finances via online tools is becoming easier every day. In the past, I’ve written about the benefits of signing up for multiple credit cards and bank accounts in order to pocket the generous signing bonuses thereby. Here I want to share some advice that should hopefully make it much easier to manage these accounts online. Almost all scheduled transactions can be automated, and new services allow you to manage all your accounts from one place for free.
Online Account Management
The first thing to do after signing up for any credit card, loan, or other debt instrument is to register your account with the bank’s website and set up automatic payments. For credit cards, you should set up AutoPay to automatically pay your statement balance on the due date each month from a checking or savings account. For loans which will be paid off over a longer period of time, set up AutoPay to pay down the loan and hopefully some additional principal as well (assuming you can afford it). This exercise takes less than five minutes and, once done, you’ll rarely need to do anything manually in the future.
For other accounts such as brokerage or investment accounts, all transactions can be done online, although these accounts inherently require more management. Most of the legwork can be automated using the online account tools, however. For instance, you can set price watches to alert you when a given stock dips below your target price, or you can set trailing stop losses to either limit your losses or ensure you lock in gains. These are particularly useful in our age of increasing volatility, allowing you to take advantage of temporary downdrafts in your favorite stocks.
In addition to the convenience factor, these online account management tools can help to enforce financial discipline, whether it be the investment discipline of stop-losses and price targets, or the personal discipline of always paying all your bills on time. Another feature that is becoming increasingly available is the ability to track your spending and investing habits. Oftentimes, we are not really aware of how we are spending our money, and seeing which categories take most of your money can be eye-opening. Once you see how you’re spending your money, it becomes easier to budget and plan your spending accordingly, and hopefully find some easy ways to save more money.
Consolidate Your Account Management
Once you’ve registered your individual accounts, there are at least two services I’m aware of which allow you to consolidate all your accounts in one place. These two are Mint and Personal Capital, and there are sure to be others in the future. These services are free and give users an overview of all their accounts in one place. After registering on the website, you provide login information for each of your accounts, possibly answer some security questions, and then all information is imported into one consolidated view. These website give a plethora of helps to the user, including tracking of spending, portfolio performance, budgeting, and alerts when you exceed your budget in a given category, etc.
Individual bank websites will typically allow you to track your spending, but it’s not as helpful if you use multiple credit cards (as you should) to pay your bills. You’ll want to use the best credit card for a given category – for instance, use your Chase Sapphire card for dining purchases (double points), but then use your Blue Cash card for grocery store purchases (3% cash back for Everday, 6% for Preferred). These websites allow you to budget across all of your accounts, and thus gives a true view of your spending. In addition to standard categories, you can create your own if you have some unique hobbies or some of your spending doesn’t fit into the categories given. The service will “remember” your categorization and automatically assign these purchases in the future.
Here’s a quick screenshot to give you an idea how budgeting works:
You can also set long-term financial goals for yourself and track your progress. In summary, using these powerful online tools to manage your finances can not only be much more convenient than more conventional methods, but they can also help you to enforce financial and investment discipline on yourself. The long-term benefits of these free tools can make a significant difference in your net worth if used properly.
Logan Hertz works as a business strategy consultant in Atlanta and freelances as a personal finance expert. If you are interested in clever, easy ways to increase your income and reduce your costs, email him.
© 2015 Logan Hertz – permission to reprint is gladly given, provided the author is given credit