Episode•July 21, 2023•18 min

Automating Your Finances - Expert Tips From Darius Smith | Ep. 248

Are you struggling with managing your finances and feeling overwhelmed? Learn how to automate your money to better track your expenses, investments, savings, and debt payments without the hassle. Join Tiffany Grant and financial expert Darius Smith as they discuss the importance of automation for financial success. From bill accounts to sinking funds strategies and Profit First principles - find out everything you need to know about automating your finances today! About Our Guest Darius Smith is an innovative computer engineer who found his true passion when he opened Indy's Indoor Bark Park -- the first ever indoor dog park in Indiana. While his business was initially successful, he, unfortunately, wasn't able to keep up with cash flow management. The resulting enormous debt of $170k was a powerful wake-up call that allowed Darius to discover more about personal financial success and get back on track via automation. Thanks to this life-changing discovery, Darius and his wife have been able to achieve an impressive net worth of $90k in just three short years! His story proves that anyone can turn their financial life around with dedication and discipline. Connect with Darius Visit his website: https://wealthismyworth.com Twitter: @wealthismyworth Instagram: @wealthismyworth Facebook Group: Wealth is My Worth Group Additional Resources I Will Teach You To Be Rich by Ramit Sethi Profit First by Mike Michalowicz To learn more about Profit First for business: https://moneytalkwitht.com/podcast/how-to-create-a-profitable-business-expert-tips-from-rocky-lalvani-ep-207/ Budgeting Basics: https://moneytalkwitht.com/blog/budgeting-basics/ This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Automation requires a complete system, not just bill pay
Includes investments, debt payments, savings, and goals in priority order
Prevents prioritization problems that lead to overdrafts
Organizes money so important items aren't left out
2
Use multiple checking accounts to separate financial concerns
Bills account: non-negotiable sacred account for all fixed expenses and debt payments
Fun money account: dedicated spending for enjoyment to sustain the journey
Variable spending account: remainder for flexible expenses
Add investments and sinking funds to the bills account for prioritization
3
Start with a full financial audit before automating
Calculate lifetime earnings vs. current net worth
Track 6-12 months of expenses to identify leaks
Know exact dollar amounts needed for each account
4
Use specific dollar amounts for direct deposits, not percentages
Update amounts annually with pay increases
Maintain a 5% buffer (minimum 2%) in bills account
Automate sinking funds for annual/one-time expenses

Intro

Tiffany Grant interviews Darius Smith about automating finances to eliminate prioritization problems and achieve financial goals without constant decision-making.
Darius Smith is a computer engineer who turned around $170k in business debt through financial automation, achieving $90k net worth in three years. He runs Wealth is My Worth and teaches the Automated Money System.

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– Defining Financial Automation

Darius explains automation goes beyond bill pay to include investments, debt payments, savings, and goals—all executed in priority order automatically.

It's not just your bill pay, but it's also your investments. It's also your debt paid down and any of your savings that you want to do.
– Darius Smith

– Why Automation Prevents Overdrafts

Overdrafts stem from prioritization problems, not insufficient income. Automation organizes money so you know exactly where funds are allocated.

I used to overdraft and I just couldn't figure out why... it was really a prioritization problem.
– Darius Smith

– Step 1: Know Where Your Money Goes

Calculate lifetime earnings vs. net worth, then track 6-12 months of expenses to identify spending leaks before setting up automation.

Calculate life earnings and net worth
Review last 6-12 months of expenses
Identify forgotten annual subscriptions

– The Three-Account System

Separate concerns with dedicated accounts: Bills (fixed expenses + debt), Fun Money (enjoyment spending), and Variable (flexible expenses).

You need to have a bills account. This is a non-negotiable, sacred account that you don't touch.
– Darius Smith

– Profit First for Personal Finance

Darius merged Ramit Sethi's automation principles with Profit First's "pay yourself first" structure to create a personal finance version.

I made like a profit first version of personal finance rather than business finance.
– Darius Smith

– Implementation Details

5% buffer in bills account (min 2%)
Sinking funds for annual expenses
Dave Ramsey snowball method for debt
Specific dollar amounts for direct deposits
Add investments to bills account for priority

Books Mentioned

I Will Teach You To Be Rich by Ramit Sethi
Profit First by Mike Michalowicz

Resources

Topics

automationbudgetingpersonal financedebt payoffsavingsinvestingProfit Firstmultiple bank accountsfinancial systemsdirect deposit