What Part of Your Finances Should You Automate?
From cable bills, to utility, to mortgage and school loans – you can automate it all and let other people do your bill paying for you. But is that really the wise thing to do? Should you allow your billers access to your accounts, the privilege of taking your hard earned money and directing it to cover your monthly debts?
In some cases there isn’t that much risk if you are certain that you can cover the bills every month. You can have a car payment or your mortgage automatically paid and you can easily have your employment check deposited into your checking account and perhaps some of it into your savings account. That makes sense and, as stated earlier, if you are positive you can cover those expenses and haven’t overspent in other areas, then why not.
The danger starts when people automate utility bills, cable bills, cell phone bills, movie rentals and more – all of the additional bills that sometimes fluctuate each month. It can be overwhelming and can easily spin out of control if you are not diligent and keep your spending in check each month. It becomes “out of sight, out of mind.” People tend to get lax when they don’t have their hands and eyes on their bills. You may assume that you have the money to cover all of these payments but what if an error occurs?
The point is, even if you decide to automate the majority of your bills you still need to be hands on. You have to budget to make certain you can cover your expenses, you must keep a list of the deductions taken from your bank account and compare them to the deductions on your bank statement. In reality the only thing that is “automated” is the process of money being taken out of your account. You are not physically writing and mailing checks but you are still taking the time to carefully examine your monthly expenses.
An easy way to keep track of your bills if you decide to automate is to use a bill paying service such as Quicken or Paytrust. They offer bill management services, payment features and support if you are experiencing a problem. You can setup alerts that send email or text messages when bills are being paid or even if your checking account is running low. With this security you probably won’t miss a payment, and thus incur a penalty fee. But again it’s up to you to keep an eye on your finances.
In the end if you are new to the automation game then you should start slow. Initiate the process by automating a car loan or mortgage or rent payment. If you are comfortable then add more bills but don’t forget to keep track of each bill. You are ultimately responsible for your money and your bills. If a mistake is made and you don’t catch it, you will have to do the work to resolve the problem. And one more thing, there is no replacement for a budget. Creating a budget and sticking to it will never be obsolete, and that’s the best place to start.
About the Author
The following post is from Kathryn Katz, a Certified Personal Finance Counselor who works for Consolidated Credit in Ft. Lauderdale, Florida. Their non-profit agency helps families through financial crisis using credit counseling, debt consolidation and financial education.