How to automate your personal finances in Australia in 2021

The four-step method I used to build an automated personal finance system with Up, Spaceship Voyager, Coinjar, and Sunsuper.

Prevailing wisdom claims the best way to get what you want in life–whether that is to get fit, build a successful business, or save more money–is to be specific and set actionable goals.

This is how I used to approach my personal finances too. Each pay, I had a savings goal I wanted to reach. Some months I succeeded, others I failed.

I came to realise the result had little to do with the goal and everything to do with systems, here’s why:

  • Goal setting has survivorship bias: We concentrate on people who hit their goals and assume the goal was what led to their success. Ignoring everyone who had the same objective ut didn’t make it.

  • Goals are momentary change: Imagine your goal is to save $100 this week and you summon up enough willpower to do it. Next week rolls around and you’ve got to do it all again.

  • You’re losing until you win: You’re either achieving your goal and are successful or you’ve failed and are disappointed. Fall in love with the process, not the product.

  • Goals act like yo-yos: You save for months then stop once you’ve met your goal. Systems are the long-term approach.

Goals aren’t useless, they’re great for tracking progress. But systems are better for making progress.

Here’s how I built an automated system for my personal finances in 2021.

Note: I’m lucky to have a simple financial situation. I don’t have a mortgage, kids, shared bank accounts, high-interest loans, or debt. This is what has worked for me and my financial life. YMMV. This is not intended to be general or personal advice, or any advice at all. As with anything financial, you should do your own research, come to your own conclusions, and consult professionals where required.

With that in mind, I hope the tools and principles outlined below can give you a headstart in building your own automated money management system.

The personal finance system

The Sankey diagram below is how money moves when I get paid. Pretty simple, right? The goal of this system is to remove optionality by automatically moving money around when I get paid.

My willpower is finite, so I outsource as much of it as I can.

To paraphrase Greg McKeown and Jim Collins, it’s about making one decision to remove hundreds or thousands of other decisions.

The decision I’ve made is to use technology to remove as much decision-making around my money as I can. With the help of a few apps I now passively manage my bills, savings, and investments. And since it’s a system, it’s easy to tweak to changing situations.

The axioms of the system are to:

  • Pay off high-interest debt first

  • Build a 3-6 emergency fund

  • Use mental accounting to my advantage and automate bill payments

  • Invest in tax-advantaged retirement accounts (superannuation)

  • Dollar-cost average into investments outside of superannuation

  • Focus on developing skills to make money rather than optimising for cash back rewards or frequent flyer points

Those six dot points are it. With the system outlined, we can now dive into the nuts and bolts of how it’s set up.

Step 1: Set up accounts

My system is made up of four parts, namely:

  1. A bank account

  2. An investment account

  3. A cryptocurrency account

  4. A superannuation account

I personally use Up for my bank, Spaceship Voyager for my investments, Coinjar for my cryptocurrency, and Sunsuper for my superannuation.

These are my choices and you should be able to use whatever accounts you want/have. You could add or subtract accounts as you see fit. It should work in a relatively similar way.

Why I use Up

Up is a mobile-first bank designed to help you organise your money and simplify your life. And I can comfortably say after more than two years of use, it does just that.

Sign up to Up using my code GOD or click here and we’ll both get $5 when you sign up and an additional $5 if you make 5 purchases in 30 days

The primary reasons I use Up are:

  • Automated salary splitting: Pay comes in and is split into four buckets (checking account, buffer, splurge, and short term).

  • Interest rate on multiple savers: Up applies their bonus rate across multiple accounts up to a combined value of $1 million unlike other banks who generally apply their bonus rate to one account. This means the buffer, splurge, short term and long term buckets outlined below can all earn interest. Note you must make 5 card purchases each month to qualify.

  • No monthly fees: Up account is free for most standard use, excluding withdrawals from non-major bank ATMs.

  • Upcoming payments: Up detects recurring payments and pops them into their own section in the app with a summary of how much is expected to come out over the next month.

  • Identified payments: Up shows you the names of the businesses you spend at, their location, and even the logo for the majority of Australia. Additionally, you can tap on the transaction and see a summary of how much you’ve spent at a location or merchant over time.

  • Great support and attention to detail: I messaged their support about a minor UI bug on a single webpage on Friday at 4:59 pm, it was fixed on Saturday at 8:01 am.

  • Fast iteration and transparent product roadmap: Their product and engineering teams ship features fast and they have a fantastic public product roadmap.

  • No fees on overseas purchases (online or in person): Up uses the standard Mastercard exchange rate of international purchases.

There are a bunch of other nice features but those are the main things to call out. You can read more about Up here and get the latest information about their fees and interest rate here.

If you need a shared account or aren’t comfortable banking solely from your phone, then you’ll need to wait for them to release shared accounts/a web app, or just use your existing banking service!

Either way, the principles I use should work with or without Up, it might just be a little less automated as I rely heavily on their Pay Splitting feature.

Why I use Spaceship Voyager

Spaceship Voyager is an investment app designed to make it easy to start investing.

Sign up to Spaceship Voyager using this code S8ZD7S9M7B and you’ll get $10 in your account when you invest at least $5 in your chosen portfolio within 90 days of signing up.

The primary reasons I use Spaceship Voyager are:

  • No minimum investment and no brokerage fees: This allows me to dollar-cost average into the market on a weekly basis without brokerage fees eating away at my returns.

  • The first $5,000 is invested fee-free: Minus potential negative returns

  • It’s low-cost: Spaceship Voyager has three portfolios: Universe, Earth, and Origin which all have low fees, at 0.10% p.a., 0.10% p.a. and 0.05% p.a. of your balance above $5,000 respectively.

  • It’s 100% equities: I want to maximise my equity exposure while I’m young, am investing for the long-term, and personally don’t mind market fluctuations.

I invest in Universe, which is made up of 50 Australian and 50 international equities. You can read more about the Spaceship Universe Portfolio here.

If you’re an ESG investor Spaceship Earth Portfolio might be more interesting, and if you’re an index investor you might like Spaceship Index Portfolio.

Like any investment, you should do your research and see if it meets your risk tolerance and investment needs. You can find Spaceship’s important documents here.

There are a lot of great investment options available outside of Spaceship Voyager too.

Disclaimer: I used to work at Spaceship and have good friends that still do. This may be biasing my choice of investment product. There are hundreds of good alternatives, such as a Vanguard ETF, Stake, Raiz, Stockspot, Six Park, Clover, or QuietGrowth just to name a few.

Why I use Sunsuper

Sunsuper is one of the largest Super funds in Australia with >$70 billion in FUM.

I use Sunsuper for my superannuation account because it allows me to invest in a fund that seeks to match the performance of the MSCI World ex-Australia Investable Market Index (IMI).

I personally allocate 100% of my superannuation to the Sunsuper International Shares Index (Unhedged) investment option with no insurance. I’ve spent a lot of time thinking about this so please don’t copy this without doing your own research!

At the time of writing, this set up costs me $78 + 0.22% p.a. I think this is one of the cheapest investment options in Australia and it suits my preference to invest outside of the Australian equity market.

As with any investment option, you should do your own research and determine what investment option meets your risk tolerance and investment goals. If you are interested in Sunsuper, you should read the PDS which will always contain the latest information about fees and costs.

This is something that is worth doing research on, superannuation is real money, and often a large percentage of your overall net worth.

Why I use Coinjar

Coinjar is Australia’s longest-running digital currency exchange. It lets you buy, sell, store, and spend digital assets.

I use Coinjar to dollar cost average about 2% of my pay into a basket of cryptocurrency. Making periodic investments into cryptocurrency is a way to increase my holdings over time while minimising the risks of short-term volatility.

Payments can be debited weekly, fortnightly, or monthly which allows me to set and forget my small investment into crypto.

I personally believe that some form of cryptocurrency is going to be increasingly important, I’m just not sure which one. This is why I invest in the Coinjar Universe bundle which is a basket made up of all the cryptocurrencies that are tradable on Coinjar. The Coinjar Universe bundle is market cap adjusted and invests in Bitcoin, Ethereum, Ripple, Litecoin, Stellar, BAT, 0x, USD Coin, Dai, Compound, Chainlink, Maker, OMG Network, Uniswap, and yearn.finance.

As with any investment, you should do your own research and come to your own conclusions.

Step 2: Creating buckets

I don’t budget, instead, I rely on using mental accounting to my advantage to create buckets (different savings accounts), hat tip to the Barefoot Investor.

Mental accounting refers to a concept found by behavioural economist Richard Thaler. The idea is people tend to place different values on money, based on largely subjective criteria.

So while money is technically fungible (meaning it is the same regardless of its origin or intended use), we tend to treat money differently based on how we allocate it in our mind (or among different accounts). Whether that be a savings account, discretionary spending account, or an investment account.

A concrete example is a piggy bank. Remember when you were young and you wouldn’t touch the money in your piggy bank but when you were given money for something else you’d spend it right away? That’s mental accounting in action.

Yes, I’m aware that mental accounting is generally used to talk about irrational spending but bear with me :)

To take advantage of this phenomenon, I classify my pay into different buckets and trick myself into saving and investing it.

The five buckets I use are:

  1. Transaction: 20% of my pay goes into my transaction account to cover any expenses or bills that might come out of my account on the following day. I try to keep a few hundred dollars in here max, so I can maximise the amount of interest my savers get.

  2. Buffer: 60% of income goes here and I transfer from my buffer account to my transaction account on an as-needed basis. This account covers daily expenses like rent and food as well as my Spaceship Voyager and Coinjar investments.

  3. Splurge: 10% is for guilt-free spending, think AirPod Pros, Deliveroo, or a Lululemon addiction.

  4. Short term: 10% is for short term rewards like holidays, flights, or any larger purchases.

  5. Long term: This account holds my sixth-month emergency fund.

Note: If I had any high-interest debt, say a credit card, I would funnel as much money into paying that off before saving or investing anything! It’s near impossible to out invest a 15% annual percentage rate (APR). Remember, we want to use mental accounting for our benefit!

The example below is how I created these buckets in Up. There’s no need to create a transaction bucket as that’s done for you when you sign up to a bank! The actual steps will obviously depend on what bank you’re with.

Remember, you can use my code GOD or click here to sign up to Up and we’ll both get $5 when you sign up and an additional $5 if you make 5 purchases in 30 days

To create my first bucket in Up, I slide across to the Savers tab and:

  1. Tap the + in the bottom right-hand corner

  2. Name the saver, e.g. Buffer

  3. Choose an emoji for the saver, e.g. 💸

  4. Choose a target amount or skip

  5. Set up auto transfers or skip

  6. Tap Create Saver

If pictures are more your thing…

I repeat these steps until I’ve set up all my buckets!

Step 3: Splitting pay between buckets

Now that I’ve set up my buckets, it’s time to split my salary across them. This is what allows us to reduce decision-making and use mental accounting to our advantage.

Note: This step relies on Up’s Pay Day feature, if you don’t use Up your bank may have a similar feature!

Up identifies my salary and lets me automatically split my pay across different accounts. This lets me automatically move money around whenever I get paid, which is a great way to reduce decision-making around how much I have to spend each pay cycle.

To set up Pay Day, I head to the payments tab and click on my employer. There should be a call to action that says Setup Split Payments. Tapping it will take me to a screen titled Split Payments which says you can Automatically split any incoming payments between your main Up account and one or more of your savers. Estimates are based on the last payment you received.

I tap the pill to enable payment splitting and use the sliders to allocate to my buckets:

  • 20% to Up account

  • 60% to Buffer

  • 10% to Splurge

  • 10% to Short Term

That’s the savings part of my personal finance system done. I use my checking account (Up account) for paying bills and any other daily expenses, when it gets low I top it up from my Buffer account. Where possible, I use automatic bill payments to ensure bills are paid on their due date.

Now it’s time to automate my investments.

Step 4: Automating investments

Personally, I invest roughly 40% of my post-tax pay as recurring investments each week. This is in addition to the 9.5% that my employer pays into my superannuation account. As outlined in the Sankey diagram above, the majority of my investment goes into Spaceship Voyager and a small allocation goes into cryptocurrency via Coinjar.

This works for me, but you should be able to use any products you like.

Here’s how I set up my investment with Spaceship Voyager. I download the app, sign up, and during the onboarding I’m prompted to set up a recurring investment on a weekly, fortnightly, or monthly schedule.

I set the amount then choose a frequency and a start date.

Sign up to Spaceship Voyager using this code S8ZD7S9M7B and you’ll get $10 in your account when you invest at least $5 in your chosen portfolio within 90 days of signing up.

If you’re already a Spaceship Voyager and didn’t set up a recurring investment during the onboarding or want to change the amount/frequency, tap on the Account tab and scroll down until you see Investment plan.

If you haven’t got a plan, you’ll be greeted with a screen titled Investment plan with a button to Set up investment plan.

Tap Set up investment plan. The next screen will have a pill with weekly, fortnightly, or monthly options. Tap on whichever frequency works for you, then change the amount and first investment date as you see fit and tap Save investment plan.

Personally, I have my investments come out on Thursday because I get paid on Thursdays, twice a month.

Likewise, with Coinjar I set up a recurring investment by opening up the app, tappingthe Bundles tab, selecting a bundle, clicking Add funds to bundle, selecting Recurring scheduled buy, choosing a payment method and payment schedule, and then confirming my transaction.

Now the savings, superannuation, and investment portions of my machine are built. While my 40% of take-home pay may sound high, I started off with an amount I could easily afford and increased it from there. It was more important to build the habit of investing. For other readers, 40% may sound really low!

Now it’s time to build your own system

Remember, this is supposed to be a system. This is one way you can automate your personal finance in Australia but not the only way. You should spend the time to do your own research, it’s your money after all!

You don’t need to use the buckets system nor have an investment account, this is a guide to help you build your own system, not necessarily clone mine.

For example, you might have a high-interest credit card, and be far better having a transaction account to cover living expenses and then diverting the rest of your income to paying it off. It depends but as a general rule of thumb, even the most astute investor is going to struggle to out invest high-interest debt. That’s why my system starts with paying that off first!

Likewise, if you don’t have an emergency fund, it probably makes sense to start there! I’m lucky enough to already have one. Either way, the most important thing is to start building a habit of saving and investing rather than worrying about specifics.

Remember, the axioms of the system are to:

  • Pay off high-interest debt first

  • Build a 3-6 emergency fund

  • Use mental accounting to my advantage and automate bill payments

  • Invest in tax-advantaged retirement accounts (superannuation)

  • Dollar-cost average into investments outside of superannuation

  • Focus on developing skills to make money rather than optimising for cash back rewards or frequent flyer points

As I got more comfortable with saving and investing, and I began to earn more I started to do more with my money. This trend will likely continue.

You might decide you want to more money in your splurge account instead and decide to forgo investing for more spending money. If you built your own personal finance machine you could.

That’s the benefit of a systems-based approach.

It’s all about building a system of small habits that can compound over time. Your personal finances, much like your life, are a sum of your habits.

But you should never underestimate the value of consistently saving and investing even a small amount over decades.

Additional resources

For more on the topic of wealth building I recommend:

For more on the topic of habit building, behaviour change and system design, I recommend reading:

As always, you can find my complete reading list here.

Thanks

Thanks to Jordan Hughes, Guy Proops, Anna Cheng, and Jack Walsh for providing feedback and reviewing the first version of this post.

Disclaimer

This is not intended to be general or personal advice, or any advice at all. All information is intended only as a general information guide.

It’s meant to be an illustrative example of how you can build your own automated financial system, with whatever financial products you decide for yourself!

I don’t know your specific circumstances and you should consider whether everything in this post is appropriate for your needs, and where appropriate, seek professional advice from a financial adviser.

Although I tried to verify the accuracy of the information contained in this page, I disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained on this page or any loss or damage suffered by any person directly or indirectly through relying on this information.

Please don’t just take this and run with it. Do your own research!