I write this as I glance at my to-do list, which I cannot recall the last time was blank. In our society, most adults are stretched thin with busy schedules, family responsibilities, work, maintaining a home, and trying to find some time for number one. Automation is one strategy that can help alleviate some of the stress that comes with extra-long to-do lists. Automation is essentially the creation of systems or devices that do things for you, automatically. Some people have filters on their incoming emails that automatically send them into a certain folder to help keep their inboxes organized. Others have their home heating systems automatically change to a lower temperature when no one is home. These systems make for one less thing to think about, and one less thing to spend our time doing.
The automation strategy can also be used to manage certain aspects of your finances, and the benefits are two-fold. First, automating your finances will save you time and stress, and second, you’re likely to prevent late fees or overdraft fees by automating. Here are three areas of your financial life that can be easily automated:
Savings
If you set money aside each month for savings (which I hope you do, even if the amount is small), set up an automatic transfer from your checking to savings. This way, you don’t ever miss a month, and you don’t need to think about it. Many people report that if they automate their savings, they don’t miss the money because they practically never saw it. Another way to do this is to see if your employer is able to split your paycheck and deposit some funds into your checking account, and a designated amount into your savings account.
Bill Paying
I was surprised to learn that only 50% of consumers were utilizing automatic bill paying as of 2013 according to marketplace.org. Automatic bill paying has been
one of the most helpful ways for me to stay on top of my bills, while barely lifting a finger. Most utility companies, insurance companies, mortgages, and car loans will have the option to input your checking account information so that the bill is automatically withdrawn every month. This system ensures that the bills always get paid, and always paid on time. This is an especially helpful strategy to pay off credit card balances on time each month! You should be able to set up an automatic payment of at least the minimum payment, which will help save on interest and help to protect your credit score. An even better way is to set it to pay the balance in full each month, if your budget allows.
Account Transfers
If you’re married and you and your spouse both contribute a portion of your income to a joint checking account, this action likely can be set up as an automatic transfer from one of your accounts to another. For those whose taxes aren’t taken directly from their paycheck, you might consider automatically having a certain percentage of your income transferred into a separate account each month so you have cash set aside for taxes when April comes around. Account transfers, especially within one bank or financial intuition, are an easy way to keep your money organized and designated for specific purposes.
Automating these aspects of your financials can save you time, stress, and unexpected fees. If you implement these systems, it is still recommended that you do a review of your accounts each month to ensure everything is accurate and paid, but this shouldn’t take as long as having to do all of these actions manually. This is especially important so that you can manage just how much you’re spending on some of the flexible expenses each month, like utilities. (For instance, if you don’t take notice that your utility bill is increasing because you never review it, you likely won’t take the conscious steps to lower the bill, like turning the lights out when you leave the room! Read about that here).
Also, be sure that the amount in your accounts is enough to support automatic bill paying or withdrawals so that you do not overdraw.
