Automate to Delegate the Small Stuff

The What

If you get to know me for any length of time, you’ll come to find that I’m a huge proponent of personal finance and all that it entails. I’m especially vocal about budgeting and how, contrary to popular opinion, “budget” is anything but a bad word — it’s one of the most powerful tools and skill sets required for a person to become financially independent.

The hard part about budgeting is getting started and sticking to it long enough to make it a habit, and eventually part of your everyday life. When I had graduated college and had my first professional job, I had budgeted from day one so that I could pay off my student loans as quickly as possible. That was around the year 2008-2009. Which, if you think about it, was the pre-smartphone era. Cell phones were ubiquitous, but without touch screens or much of anything besides a physical keyboard and a tiny ~2” LCD screen. For a bit of nostalgia, this was the cutting edge of technology: CES: Best Smartphones of 2008

That being said, my attempts at budgeting were purely Microsoft Excel-based. It’s so long ago, I don’t remember how it was set up, but suffice to say it had a column for every “envelope” to which I assigned money. I had one worksheet for all the downloaded bank activity of the past two weeks, and somehow I tried to match those transactions to a column of the budget. If just reading that description sounds tedious to you, then you can imagine how it was to actually do it. I’d tried this system for months, and even though I consider myself quite the Excel whiz, it just never worked well.

Fast forward a few years to 2012, and though I was paying off my loans at a fantastic rate, I was still struggling to spend within my means, try as I might. That’s when my then-girlfriend, now-wife did some Googling and found this rather new app (because smartphones were a thing now!) called EEBA, an acronym for Easy Envelope Budget Aid. Ah ha! This being on a smartphone and thus much more mobile and user-friendly than plugging away at a laptop, it immediately had benefits over my old school method. I gave it a shot.

This post isn’t about the app specifically, so that’s as much gushing about the actual app as I’m going to do. Getting back to the topic of this post, I will add just one more thing: the caveat to using it, and actually the reason that I chose that app over a couple of others, was this one flaw-and-benefit: it did not sync to any bank accounts. That meant that every transaction had to be made manually. That meant that every purchase at a gas station or restaurant or online required that I get the printed receipt, or make sure to check my email for the purchase verification and full after-tax cost. Then, between once and twice between paychecks, sitting down for about half an hour with a stack of receipts and my phone, and manually entering in each one. Then, the day before the next paycheck was due to arrive, looking at the current bank account balance and the difference between what the bank showed and what EEBA — actually, by that point they’d changed their name to Goodbudget — what Goodbudget showed, and doing some mathematical gymnastics to make them match (i.e. balancing the budget).

The Why

As I said, I chose this app over others that already had bank syncing built-in. I could’ve saved myself all this hassle which recurred every two weeks like clockwork, but I opted for the manual approach. Why? For two reasons: (healthy?) skepticism, and personal development.

Healthy Skepticism

Remember, this was over a decade ago when I found out “there’s an app for that”. At this time, e-commerce wasn’t exactly in its infancy, and online shopping and banking were standard and relatively cyber-secure. But these new app development companies were relatively new, and as such in my mind, may not have all the cybersercurity built-in that they should, for such sensitive information as a link straight to my bank account. Plus, I was still about neck-deep in student loans, and the last thing I wanted was some developer to have a link to my bank account. Yes, they probably used all the same top-notch security features as Amazon, but Amazon had more “skin in the game” about getting it right, than a small indie developer.

Personal Development

The other factor in choosing this particular app with its lack-of-a-feature was all about personal development. Even though I was great at keeping receipts and having a decent mental image of how much money I had, I needed to hone this skill myself before I let a program take over. And, well, I’m also a bit of a control freak who wants to be able to take over and do all the things in the case that the automation isn’t doing it right (for example, I still drive a car with a manual transmission).

(Mini soap box moment ahead…)

Do you know how hard it is to go through the grocery check-out or fill up your gas tank and make sure you say, “yes I want the receipt” ?? I don’t know why, but when I started doing that, I felt kind of guilty. Or, “less than.” I felt like admitting that I needed the receipt was an admission that I was insecure about how much money I had. It felt like that hypothetical moment where you’re buying something and you give them your card and the cashier gives you that “I’m sorry” face and tells you it’s been declined.

I kept buying all the usual things I’d been buying in the Excel-based budgeting days and keeping the receipt. Then putting in the receipt either that same day, or on the last day before a new paycheck. It was tedius. It was self-belittling. It was very humbling.

But it became very, very rewarding.

Imagine my emotions as those first few weeks came and went, and I kept asking for the receipt and manually typing it into the app. Seeing all my virtual envelopes fill up with green with a new paycheck, then slowly dwindle down to zero (or in some cases, red… cough Starbucks…) right before the next paycheck. But right before that next paycheck, looking at my bank account balance and seeing the exact same number there as in the app. Imagine being someone who tries and tries to live below their means and think they know how much they have in their account, only to always be surprised that they have a lot less than they should… to, all of a sudden, being exactly sure how much they have in their account, by just glancing at their phone. And what’s more, imagine all of a sudden knowing exactly how much your life costs, based on these envelopes you have for all the necessities… and realizing that you actually make plenty of money to cover your needs, as well as some of your wants, if you only stay true to your budget! It’s so empowering.

You know the phrase, “knowledge is power.” It’s my belief that the knowledge and power of my Mechanical Engineering degree is far outshadowed by the knowledge and power of learning how to set and live within a budget. Which is exactly what every profitable business does. But, whereas even the most highly skilled engineer without a budget skillset will have to work for a company until he hopefully retires… an entry-level engineer (or anyone who works without any degree at all) that does know how to budget, knows that he is his own business and ultimately works for himself. It’s the difference between thinking of yourself as “just an employee for a company” vs. “your own employer being paid by a customer.”

(Stepping down off soap box)

Suffice to say, I made myself (and my wife) follow this strict exercise program. We did it for years. Then, finally just last week, we had yet another moment of budget balancing where the two didn’t agree. This actually happens much more often than it should, where somehow one or two transactions didn’t get put into Goodbudget. Maybe we forgot to account for sales tax. Or we forgot to include the tip in the amount. Either way, for the umpteenth time, Goodbudget told us we had ~$600 left for the next week before the next paycheck, but the bank account showed $200. That’s a huge difference. This kind of situation has happened before on numerous occasions, and I’ve learned not to panic about it. But this time something finally clicked.

I realized that my wife and I had become proficient at balancing the budget ourselves. The process had become muscle memory. But we still weren’t perfect and yet again we had to go see where we were off by hundreds of dollars, and even though I didn’t panic, I was stressed. But out of nowhere it popped into my head, that Goodbudget recently started offering a higher tier subscription with the perk of syncing with your bank account. And it’s been years since I’d originally thought that having an app sync to my bank was too risky. After all these years, more and more apps had this ability and it’s become ubiquitous and there have been no major security flaw revelations.

We knew how to do it ourselves, and we knew the process worked. It was time to hand over the reins to automation. Our “home business” had grown to the point where that process was as streamlined as could be, but the implementation was costing us more in time and energy than its benefit.

The Takeaway

I often find inspiration for leading my home life from how my employer leads its business life, and this is a great example. It echoes the natural progression of any professional, from entry-level to mid-level to senior-level. You start off doing all the small-in-scope, detailed, tedious things. After you’ve mastered that, you’re given larger-scope, less-detailed, more broad-based things. And what happens to all the smaller-scope, detailed things that are still required? Some of them you still might do, but if the benefit outweighs the cost, you delegate those smaller things to the new entry-level person. Or for a “home business” of yourself and your spouse, you delegate it to a program. This allows you to get more done (bring more value) per unit of time, than you could’ve done before.

It’s only been a week since I’ve used the syncing feature. And I can tell the process isn’t going to be without its bumps in the road. But already I see bank transactions showing up in the app without my having to save the receipt and type it in myself. All I have to do is start telling it which envelope a certain expense goes to, and in time it’ll learn this pattern itself and won’t have to. I think once I give this app its due onboarding process, I can be fully hands-off and get back that one hour every week or two that was spent doing it all manually. One hour less required to focus on current-day efficiency, and one hour more to focus on future-day growth.