Burkholder Wealth Management
Updated: Mar 10, 2022
Occasionally, when I check my credit card expenses, I get a wide-eyed look from observing an expense I do not recognize. Wait? Woah… why does this expense say Seattle, Washington? I’ve never been there. What is this… ohhh, it's my Amazon Prime monthly charge. I remember now. Got to have Amazon Prime, right? Tag it on to all the other monthly subscriptions that dip their hands into my account, you know all the ones I am talking about.
According to McKinsey consulting, subscription-based model revenues have more than doubled in the last five years alone; I am confident I do not have to convince you that e-commerce has exploded in the last decade. Big retailers, and new companies are tapping into the useful power of recurring payments. The big companies learned that it is much more marketable, and psychologically beneficial if they put your expenses on autopilot. It’s simply the path of least resistance.
Challenge: List out all your recurring payments that are on autopay.
So how do we get this pattern of autopilot to work in our favor? It is simple. Put your savings and investments on autopilot. Anything that requires additional effort is difficult to stick to. Even if it is for our own benefit, like saving for retirement or eating healthy. Follow the path of least resistance. If you do not automatically deposit funds into your investment accounts, the natural course of action is to spend that money. You now have to compete with yourself for your own dollars. Why make it harder than necessary? If you have an investing goal, setup recurring deposits and let it ride.
Personally, and I believe I am in the minority, I kind of enjoy paying bills and expenses. It is clarifying to me, and it gives me an odd sense of accomplishment – a tangible reward to my work. Maybe I am not alone. Nonetheless, I feel the same when I deposit money in my investment’s accounts. So, if I automate it, I lose some of that endorphin hit to seeing my deposits go through. I still have auto deposit on, but now I am encouraged to invest extra. I am hacking my brain to go above and beyond to reach those goals. If you are like me, setup a baseline, and try to overachieve.
Even if you do not have a plan and have no idea how much to automate to reach your goals, start somewhere. If you start, even just a marginal amount, it will be easier to change the amount later once you have a proper plan put together. Finances can be complex, and overwhelming, so let us not make it even harder on ourselves. Put your investments on autopilot, and spend your time focusing on other, more enjoyable things!