Why you should never “set-and-forget” or automate your cashflow.
How do you feel about setting and forgetting your finances, and automating your processes? When we think about automation or set-and-forget we cringe. Why? Well, when you put your life on auto-pilot, it’s the same as handing your keys to somebody else and just cruising through life, never experiencing the thrill of achieving goals, never experiencing the highs and lows that come with “experience.” You give up any sole responsibility you have for the success or failure of the “thing” (in this case finances) you are seeking to automate.
Marriage is a great example of automation, set and forget, and of course – “auto pilot.” Think about it… you get married, and you are married for life – “for better or worse.” If marriage were akin to a product and/or service you would see just how similar marriage is to automation. There are no prompts, no yearly invoices, no quarterly invoices, no opportunities for you determine if the “product is still the right fit for you.” Additionally, you have no opportunities to have an open conversation with your provider about its performance, or an option to compare your existing product with another product on the market.
Can you imagine if your existing product (in this case marriage) was optimized each year? That each year you had a review with your significant other and you both signed a renewal agreement with terms, to improve on any particular area of your lives? Hard conversations could be had in an open environment, positive changes can occur, and the expectation of a review and preparing to deliver your absolute best at your review every 12 months would be advantageous for future directions of the marriage.
When it comes to marriage as stated above (clearly in jest), we put our relationships on “automation,” so it makes sense that as we are all so busy with everything going on in life that we also put our finances on automation. An automated approach to managing your money is absolutely detrimental to your financial future as it closes down all conversations with providers for better deals. You tend to end up “trusting in the system,” of either a third party or something that you have developed in-house. The problem? Automation removes your accountability and your opportunities to have hard conversation with your cashflow on it’s performance, now or in the future, and how it can best serve you going forward. You are knee-capping your financial future!
Always remember: money is merely a tool – it is not emotional. Why do we give away our control of managing it by automating it? Why are we afraid of taking the responsibility of our wins and losses? Shame, fear, guilt? Embarrassment?
Automation only takes into account if things go right, that everything will flow. Seems simple in nature, but what about when we hit roadblocks, or things go wrong…? Automation over the long-term will end up eroding your skill-set, and dulling down your coping strategies when things go wrong. Automation prevents hard conversations from occurring that deliver positive results, and when something does go wrong, you will often find that you lack the skills to fix the problem, or that the problem will be very time consuming and stressful to fix. Automation can do more harm than good!
3 things to consider when it comes to automating your cashflow:
- If you insist on automating your processes by developing your own in-house processes, book a once per month meeting with your partner (or yourself) and block out a good 2 hours to go through your goals, where you are going, where you want to be, and map out a timeline that is tangible and in-line with your goals. Right any wrongs, and put contingencies in place for where you may be aware that changes are likely to occur (like being unpaid at Christmas/School holidays etc). Always have a plan around the plan.
- If you work with a third party that can show you clearly where you will be in 10 years financially, consider that this plan may not have contingencies in place for the short term. For example, what if you lost your job tomorrow? What if you went from working 5 days a week to 4 days a week? What about your savings goals? Having data for 10 years ahead and thinking you will be fine by looking at the end goal has the potential of only allowing you to have long-term vision, and tripping over the rock right in front of you. It might seem like a good idea, but clearly lacks vision…
- If you choose to have your cashflow automated and taken care of by a third party, consider that you are handing over complete control of your financial position to another provider that may not share the same values and ethics as you. Will they pay your bills on time? Will they keep your savings safe? Will you have money for the weekend to take the kids out? What if their systems crash and you are denied access to your own money…? Nothing good ever came from giving your money to somebody else to manage for you, especially when systems fail!
Ultimately, the biggest problem with automation and setting and forgetting is that your eye is off the prize and your financial future is not front of mind. There comes a time in all of our lives that when we plan for our future, we must take responsibility of where we are now, and if we don’t like the reality of that, that we make an active choice to improve our situation sooner rather than later.
Your cashflow, your money and your financial future all deserve the respect of your time. Spend the time having hard conversations that lead to positive destinations and develop a plan that makes sense to you! The sooner you open the conversation, the sooner you develop your plan, the better your financial future will be for all involved.