Making automatic payments and why it works
Stressed out about paying bills on time? Want to actually save some money? If something is that important to you, set up a schedule to make it work!
Setting up autopay for your bills is smart, but what about the non-bills like your emergency fund, savings accounts, investments and your “fun account”? There’s no reason why you can’t set up a system for these as well!
After subtracting your monthly expenses from your income, what’s left over needs a place to go. To avoid spending it, consciously delegate where it goes. This will give you a greater feeling of control over your finances.
Let’s say you want to buy a new set of golf clubs and you’ve been eyeing them for a year now, but you still don’t have the amount you need to purchase them. How about setting the intention of giving yourself a certain amount a month that immediately gets transferred into a “fun” account? Then, when those golf clubs go on sale you can snatch them right up.
What about investments? Contributing to your investments regularly has multiple benefits but the main one is the power of compound interest. It’s hard to give money away each month to your investments and not see any return like you would with your “fun” account, but we all know in the long run you will be very grateful you have set this up for yourself. Set it up automatically and forget about and feel confident you have secured your future.
What about your savings account? Are you the kind of person who says “I just can’t seem to save”? This method of automatically depositing a certain amount into a savings account is for you. It’s a necessity! It will become part of the budget and you will accumulate a nice little cushion over time that you can be proud of.
Why does making things automatic work?
We’re busy.
All of us are juggling multiple things at a time every day. We get overwhelmed, we can forget, or we just don’t feel like the effort is worth it. By making things automatic, things get done. Goals will be accomplished and before you know it, you’re celebrating checking off a few things on your dreams list!
When you make things automatic, every one of your hard earned dollars goes where you want. That’s a good feeling and when something feels good, we want to keep doing it, right?
Watch and see how fun it is when you've got all the important areas of your life covered. If an emergency happens, you won’t feel the pinch of paying for it or enjoy that rejuvenating ski vacation completely, without worrying about paying for it later.
A side note: Be sure to still look at your utility bills and ensure that everything looks right. Just because you are making automatic payments, doesn’t mean you shouldn’t continue to be aware. Check out this “How to negotiate your bills” post next!