Trade The Journey

Trade The Journey

Back to the Basics

How does the title of this post relate to the picture featured in the post?

It doesn’t.

Illmatic is my favorite album of all time besides Mailbox Money.

Left some jewels in his skull that he could he sell if he chose – One Love (Lyrics from a song on Illmatic in which Nas imparts wisdom on a youth through a conversation) ~ Nas


 

Automatic Withdrawals can be both a blessing and a curse.

Although automatic withdrawals can increase the amount you save, they also can increase your monthly expenditures if you are not careful.

I use automatic withdrawals to pay bills and save. Using this feature helps me save more and manage my day better. Trying to remember the due date of each bill can be troublesome. Paying Bills is a task that has to be completed. With automatic withdrawal, It’s one less task I have to remember to complete.

Saving money can be another hurdle. Although most of us have online banking, how many of you transfer money to your savings account regularly?

Some can save without a problem because their thoughts and actions aligned with their goals. Some may have been taught at a young age how to manage money properly. For most of us, we had to learn the hard way.

Automatic withdrawal changes this and phone apps have changed money management from painful to effortless. Along with becoming the catalyst for the change in the commission fee structure in trading/investing, apps have also been the Kickstarter for helping people to improve their financial skills.

They have apps for budgeting, fractional investing, trading, bill paying, repayment of student loans, and financial learning. All are designed to help you manage money better and assist you in growing your wealth.

Apps and automatic withdrawals also have a harmful component to them. If your income fluctuates or your expenditures increase, having automatic withdrawals can add to the amount you owe. Allow me to illustrate:

This last month and the month preceding were challenging, and for some reason, my money kept disappearing. Each day I worked, I prepared my lunch and strived to make smart purchases throughout the week. However, I finished each week praying for relief as I entered into the next week.

Sure, I made some careless purchases but nothing to warrant the sizeable decrease in my account balance from week to week.

 

As I scrolled through the expenditures, I noticed the problem:

Too many automatic withdrawals.

A lot of the withdrawals were for small and consistent amounts. Acorn and chang-ed apps use an accumulation system to save money for you by rounding each purchase to the whole number.

Once you reach the $5 limit from these round-ups, the app withdraws the money from your account. I also paid my bills by allowing companies to withdraw their fee for doing business directly from my account.

While automatic withdrawals can be a blessing, helping to make your life a little easier. It also becomes a nightmare, making your life a little harder if poorly managed.

Now, I’m back to the basics. I’ve canceled a lot of the services I have become accustomed too like Hulu, Netflix, Onstar, great courses online, and others.

Although I am still saving and investing at the same pace as before, I have decided to halt the apps withdrawing money by using round-ups. So far, I haven’t had to change the weekly amount withdrew from my account for trading or investing.

Why?

The money I have saved for investing and trading is money that I seldom touch because I believe it to have magical powers. By applying what I have learned throughout the years, this money is compounding. Albert Einstein once said that “Compounding” is the eighth wonder of the year.

The money you saved earns interest. The interest and the money initially saved now earn interest. This process continues as long as you can do it successfully.

Every once in a while to get things in order, I get back to the basics. By taking this action, I can increase the amount saved in my regular savings account. This money is easy to get to and tremendously beneficial when facing short-term emergencies.

Often it can take close to four days to receive the money from apps like Stash and Acorns. When you need the money its good to know you can get to it quickly.

In one of my much earlier posts, you can read about the importance of separating your accounts to manage your money better.

 

This week, I’d like to give myself a “C.” I hate to receive a “C,” but I know that I can do better as a money manager.

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