Rich Habits Podcast - Episode 102: Building Automation With Your Money
Release Date: January 27, 2025
Hosts: Austin Hankwitz and Robert Kroke

Introduction

In Episode 102 of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Kroke delve into the crucial topic of automating personal finances to build wealth effectively. Drawing from their diverse experiences—Robert as a decamillionaire entrepreneur with over 30 years in business, and Austin as a young entrepreneur with a strong background in finance and economics—they provide listeners with actionable strategies to streamline their financial management.

Overview: The Power of Financial Automation

Robert Kroke sets the stage by emphasizing the importance of automating money management:

“By automating your money, building wealth is inevitable.”
[01:56]

This central theme underscores the episode, highlighting how automation removes emotional biases from financial decisions and ensures consistent investment without the pitfalls of market timing.

Strategy 1: Automate Your Bills

Robert Kroke breaks down the first strategy:

1. Create a Comprehensive Budget: Utilize tools like Google Sheets or budgeting apps to list all monthly expenses, including subscriptions, utilities, insurance, and more.

2. Calendar Your Payments: Document every bill's due date to gain clear visibility of cash outflows, preventing surprises and overdrafts.

3. Set Up Autopay: Automate bill payments to ensure timely settlements, avoid late fees, and maintain financial discipline.

“Write down every single date that you know a bill is due... This will prevent overdrafts and unexpected expenses.”
[04:30]

Austin Hankwitz reinforces this by sharing a personal anecdote about his girlfriend's successful implementation of automated payments, illustrating the peace of mind that comes with financial clarity.

“Having that visibility and having that clarity week to week, month to month... gives you relief.”
[05:50]

Robert emphasizes the repercussions of neglecting this strategy by recounting a client’s experience:

“He had over a hundred thousand dollars in overdraft fees because he wasn’t planning ahead.”
[06:37]

Strategy 2: Automate Your 401(k) Contributions

The second strategy focuses on maximizing employer-provided retirement benefits:

1. Contribute Up to the Match: Ensure you’re investing enough to receive the full employer match, effectively obtaining “free money.”

2. Prioritize Roth IRA Investments: After securing the match, funnel additional funds into Roth IRAs and diversified index funds like the S&P 500.

3. Maximize with Autonomy: If your 401(k) allows, tailor your investments beyond basic options to better align with your financial goals.

Austin shares his personal success story with automated 401(k) contributions, highlighting significant growth achieved with minimal active management:

“I have $22,000 in my 401(k) after automating contributions without actively managing it.”
[09:00]

Robert warns against high-interest debt overshadowing the benefits of automated investing:

“You cannot out invest high-interest debt. Pause the 401(k) investing, pay off the high-interest debt, and then return to the 401(k) match.”
[10:26]

This advice underscores the importance of eliminating burdensome debt before committing additional funds to investment accounts.

Strategy 3: Automate Your Investments with Public.com

The final strategy introduces Public.com as a tool for automating investments:

1. Set Up Recurring Contributions: Allocate a fixed amount (e.g., $100 weekly) to various investment vehicles such as stocks, ETFs, and cryptocurrencies.

2. Customize Your Portfolio: Choose from predefined investment plans or create a personalized portfolio with up to 20 different assets, ensuring diversification and alignment with individual risk tolerances.

3. Leverage Autonomy for Growth: Automation ensures consistent investment regardless of market fluctuations, facilitating dollar-cost averaging and long-term wealth accumulation.

“Public.com will automatically withdraw that amount of money from your checking account and then invest it accordingly.”
[14:10]

Robert highlights the benefit of this approach in preventing emotional investment decisions:

“Dollar cost averaging through the automation will continue to win over time.”
[15:43]

Austin reiterates that the key is not the platform itself but the act of automating investments, encouraging listeners to leverage any suitable brokerage service that offers automation features.

“The principle of this strategy is to automate your investing... it doesn’t matter what brokerage you use.”
[17:15]

Listener Questions and Expert Advice

The episode transitions into a Q&A segment, addressing real-life financial scenarios submitted by listeners.

Question 1: Matt N. - Overcoming Debt and Building Credit

Matt, 28, earning $99,000 annually, struggles with a credit score below 550 and $14,500 in debt.

Robert advises:

• Revamp Your Budget: Analyze income versus expenditures to identify overspending.
• Seek Parental Assistance: Utilize support for essential purchases like a reliable yet affordable vehicle to avoid high-interest loans.
• Focus on Debt Repayment: Aggressively target high-interest debts to improve credit scores and financial stability.

“If you're making $99,000 a year, you should not be having these problems. You need to fix it.”
[22:45]

Austin supplements with a detailed financial plan, suggesting a phased approach:

1. Purchase an Affordable Car: Save and buy a used vehicle outright to eliminate recurring rental costs.
2. Allocate Savings Aggressively: Direct $1,500 to $2,000 monthly towards debt elimination.
3. Future-Proof Financial Health: Post-debt, reinvest freed-up funds into retirement and investment accounts.

“By automating your bills and getting out of high-interest debt, you will retire a millionaire by 65.”
[28:08]

Question 2: Fady B. - Managing High Student Debt While Planning for the Future

Fady and spouse, combined income of $24,000 monthly, face $500,000 in student loan debt while aiming to buy a home and start a family.

Robert recommends:

• Debt Reduction Strategy: Prioritize paying down student loans while maintaining investment contributions.
• Deferred Home Buying: Delay purchasing a home to focus on debt repayment and investment growth.
• Collaborative Financial Planning: Conduct thorough budget reviews with a partner to optimize financial decisions.

“With $24,000 post-tax every month, you should be able to put away a really good sum and knock all this out.”
[29:46]

Austin adds:

• Invest Before Paying Off Debt: Allocate surplus funds to investments first, allowing them to grow before tackling debt.
• Leverage High Earnings: Utilize their substantial monthly income to build a strong investment portfolio while systematically reducing debt.

“Automate your investing and have your money spoken for before it even enters your checking account.”
[32:22]

Question 3: Madeline A. - Financial Advisors vs. Self-Management

Madeline, 30, seeks advice on whether to continue with a financial advisor or manage investments independently using platforms like Public or Robinhood.

Robert outlines the pros and cons:

• Benefits of Financial Advisors:

  • Comprehensive financial planning including estate, retirement, and business structures.
  • Fiduciary responsibility ensuring advice aligns with clients' best interests.

• Cautions:

  • Hidden or excessive fees (typically around 1% of assets under management).
  • Potential for underperforming investments if advisors rely on generic funds or high-commission products.

“Find a fiduciary and ensure their fees are transparent and reasonable.”
[36:01]

Austin provides a balanced perspective:

• Early-Stage Investing: Encourages self-management for those building their financial base to avoid unnecessary fees.
• Growth Stage: Suggests transitioning to a financial advisor once investments reach a substantial scale or personal circumstances become more complex (e.g., family, multiple income streams).

“Personal finance is personal. Having a financial advisor is a personal decision.”
[38:51]

Key Takeaways

1. Automate Financial Processes: From bill payments to retirement contributions and investments, automation fosters financial discipline and growth.

2. Prioritize Debt Management: Eliminate high-interest debts before amplifying investment efforts to maximize financial health and investment returns.

3. Leverage Appropriate Tools and Platforms: Utilize services like Public.com for investment automation, ensuring investments are consistent and aligned with personal financial goals.

4. Tailored Financial Advice: Assess when professional financial advice is necessary based on the complexity of financial situations and asset scales.

“Make your money work as hard for you as you work to get it.”
[13:23]

Conclusion

Episode 102 of the Rich Habits Podcast offers a comprehensive guide to automating personal finances, detailing practical strategies to enhance wealth-building efforts. Through clear explanations and real-world examples, Austin and Robert empower listeners to take control of their financial futures by minimizing emotional decision-making and maximizing systematic investment practices.

Notable Quotes:

• Robert Kroke: “By automating your money, building wealth is inevitable.”
  [01:56]

• Austin Hankwitz: “Automating your money sounds complicated. It sounds intense, intimidating. But we promise this episode we're going to break things down in a super simple format.”
  [02:46]

• Robert Kroke: “Little leaks sink ships.”
  [07:43]

• Austin Hankwitz: “I already have it spoken for. So the only way I have that clarity, of course, goes back to automating my bills.”
  [12:22]

• Robert Kroke: “Make your money work as hard for you as you work to get it.”
  [13:23]

This episode serves as a valuable resource for anyone looking to streamline their financial management through automation, offering both strategic insights and practical advice to foster long-term wealth accumulation.