The world is a noisy and distracting place. Our society is glued to our mobile devices to the point of them becoming extensions of ourselves. It does not take much to become distracted by a phone message or alert. We also live busier lives—trying to get everything done in a day can seem like a heroic task. With everything going on it can be easy to miss paying a bill once and a while. It may not be detrimental one time but add a few missed payments here and there and it can negatively impact your credit score. Plus, it can end up costing you late fees. Automating all your finances is the solution to never missing a payment again.
Autopilot
I used to take flying lessons in college and learned about all the different flight instruments and buttons in the cockpit. Flying a plane can be kind of like managing your life. You are juggling many different tasks and cannot focus on all of them at the same time. In the cockpit you need to be aware of your altitude, airspeed, vertical speed, heading, oil pressure, etc. You also need to be scanning for aircraft and be ahead of the weather. Using autopilot helps with resource management so you can better focus on arriving safely at your destination.
In life you also have a lot of tasks to manage. You need to work, get ready for work, manage relationships, take care of family members, buy groceries, clean, do laundry, and on and on. On top of managing the complexities of everyday life you must pay bills. Would it not make your life a little easier if you put your bills on autopilot? It would take out some of the stress and worry about missing a payment. You could also put your investing on autopilot to make sure you pay yourself first.
Setting Up Household Expenditures
The largest expense for households is usually housing. It would make sense to automate this payment because the late penalty for a missed rent or mortgage payment can be costly. Renting at an apartment complex usually offers a portal where you can sign up for an automatic payment. Having a mortgage through a bank will also likely offer an automatic payment method that you can setup. You can usually combine the taxes and insurance for this payment too. If automatic payment is offered, it is highly recommended to use it, so you never miss a payment.
Along with housing comes utility payments. This includes electricity, water, cable + internet, or gas depending on what you use. A reputable service provider will have an online website where you can register an account and sign up for recurring payments. Again, automatic payment is preferred so you do not pay late fees or get interrupted service.
Owning a vehicle is another common household expense that can be automated. Dealerships will have online accounts where you can setup recurring monthly payments. It is also recommended to setup recurring online payments with an insurance provider.
Food is a common household expenditure, but this obviously does not need to be automated unless you have some sort of periodic delivery service.
Credit Cards and Miscellaneous Expenses
With the common household budget items automated, it also makes sense to automate credit card payments and any subscription services you have. Subscriptions usually require a recurring payment method, but credit cards do not always require this.
Credit cards get a lot of people in trouble because it is easy to run up the balance unknowingly. It can be even more troubling if a payment is missed. The credit card companies make a lot of money off interest payments and late fees. The easy way to avoid both is to automatically pay off the balance every month. At the very least an automatic payment should be set up for the minimum payment required. You can pay more when you have the funds available, but having the minimum payment scheduled each month will keep you out of trouble.
Any debt obligations or other miscellaneous expenses that you may have you should find a way to get on an automatic payment plan.
Investments
In the book The Automatic Millionaire by David Bach, he talks about the “Latte Factor”. The idea is that if you can find a way to cutout an expense like a $5 cup of coffee at Starbucks every day, then you can invest it instead to become a millionaire over time. He also goes into more detail about automating your finances and breaks down how to automate your investing. Setting up an Individual Retirement Account and/or an employer 401K plan that you pay into monthly can be a winning financial strategy for retirement.
It is also a good idea to automate savings each month so you can have money for an emergency fund or investing. It might be a good idea to have it in a separate account from the bank you use. I find it easier to keep savings untouched if it takes an extra step to transfer it into a spendable account. There are some good online savings accounts you could open to keep it separate from your main account: 9 Best High-Yield Online Savings Accounts of June 2020
Conclusion
It can be overwhelming at times to deal with all the craziness going on in each day or week. All the different bills and accounts that you owe on can be overwhelming at times too. Anything you can do to make your life more manageable or easier reduces stress and makes it more enjoyable. Putting your finances on autopilot will help you resource manage better.
It does not mean ignoring finances all together—you will still want to make sure the right payment is going through; however, you will have peace of mind knowing that you will not miss a bill or have to pay any late fees. Get started today on moving towards having all your payments and investments automated in one way or the other. At the very least have a phone or calendar reminder when each payment is due if you cannot automate.
Control the trajectory of your finances with the help of autopilot and adjust along the way.
