Do you hate keeping track of which bills are due when?
Do you find yourself reaching the end of the month and wondering where all your money went?
Do you want to save more, but you never seem to have enough left over?
If you suffer from any of these financial issues, the answer to your problems may be as simple as adopting a "set it and forget" strategy. Automating your finances is one of the easiest ways to get better control of your money.
We'll get into the "why" in a moment, but first, let's look at what we mean by automation.
"Automation" means setting up automatic systems to take care of money management tasks you normally handle yourself.
Automating your savings could involve setting up an automatic transfer from your checking to your savings account every pay cycle, so you never have to remember to put anything aside yourself.
Automating your retirement contributions could mean setting up an automatic deduction from your paycheck that's added to your 401K account, or automatically transferring money from your checking account to your Individual Retirement Account (IRA) each month.
Automating your bill payments means setting up an automatic recurring debit from your checking account to your heating company, phone company or other service provider on the day your bill is due.
If you're worried you'll spend the money you've earmarked for bills before their due date comes up, consider opening up two separate checking accounts--one for bill payments and one for spending money. Each time you receive a paycheck, have a set amount automatically transferred to each account to cover your needs.
Those are the basics of automation. (Pretty simple, right?) Now, let's get into why automation is such a great thing for your finances.
1.It Reduces the Likelihood of Human Error
You forget to mail out the cable payment on time, and you're hit with a late fee. You accidentally spend the money you'd designated for the phone bill. We all make mistakes. Even the most organized among us has had a momentary lapse in memory or judgment. But those lapses can through a wrench into our financial planning.
When you automate your finances, you remove the human error factor from the equation. Want to put $100 aside for savings each month? It's done. Want to pay all your bills on time? It's done. Easy as that.
When you pay yourself first, you take the money you need for savings and bills and place this "out of sight, out of mind." This makes it much easier to resist temptation when you're faced with an enticing purchase.
If the money were available in your account, you could potentially talk yourself into spending it. But you can't spend what you don't have. Placing it out of sight reminds you it's been allocated for other things.
3.It Forces You to Be More Frugal
We've all had moments where we consider "robbing Peter to pay Paul." Our car breaks down, and we use the money we'd meant to put into retirement savings to fix it, figuring we'll make up the difference at some point later on. (Then something else comes up, and we never do get around to making up that difference.)
When you automate your savings and bill payments, you're left with only a certain amount of money to get you through the month's other expenses. When an unexpected expense comes up, you're forced to get creative about paying for it--either you can delay the purchase, find a cheaper way of obtaining it or slash another spending area, like eating out for the rest of the month, to pay for it.
4.It Gives You a Safety Net
Speaking of those unexpected expenses, automating your savings helps you to deal with them, too. When you're regularly setting aside a certain amount of money each month for savings, you can build up an emergency fund that will cover any of those extra costs that can (and will) crop up, without derailing your budget.
Late fees, overdraft fees, bounced check fees... All of these expenses can strip away your hard-earned cash. When you "set it and forget it," the likelihood of incurring these extra fees goes down dramatically.
Time is money, as they say. The less time you spend coordinating bill payments, handling paperwork and fiddling with your budget, the more time you have for money-making (or money-saving) activities like starting a side business, cooking from scratch, or selling your gently-used stuff on eBay.
7.It Frees You From Guilt
When you automatic your finances, you that know any money you have left over is spending money, so you can splurge on that new phone or feed your latte habit without worrying it will hurt your ability to pay your mortgage. And that's a very nice feeling.
29 Ways You Waste Cash
29. Impulse Buys(01 of29)
Open Image ModalWho doesn't know that impulse purchases are a bad idea? I've even realized it was a bad idea as I was doing it. So here are three quick tips: 1. Make a shopping list. Take it with you and stick to it. 2. Eat beforehand. An empty stomach can doom the most prepared shopper, especially at the supermarket. 3. Shop alone. Bringing children (or a significant other who acts like a child) is a sure way to fill your cart with impulse buys. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="94" data-vars-position-in-unit="96">Flickr:</a><a href="http://www.flickr.com/people/lrargerich/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" lrargerich" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/lrargerich/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="95" data-vars-position-in-unit="97"> lrargerich</a>)
28. Buying Online Without Comparison Shopping(02 of29)
Open Image ModalWhen you shop online, there are hundreds of sites competing for your business. Buy those shoes at the first site you go to and you may be wasting money. Compare the purchase and shipping price at three or more sites before you buy anything. (credit:<a href="http://www.flickr.com/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="92" data-vars-position-in-unit="94">Flickr:</a><a href="http://www.flickr.com/people/theogeo/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" theogeo" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/theogeo/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="93" data-vars-position-in-unit="95"> theogeo</a>)
27. Paying For Protection You Don't Need(03 of29)
Open Image Modal26. Being Disorganized(04 of29)
Open Image ModalBeing disorganized about your finances leads to costly late payment fees and overdraft charges. You can easily rack up hundreds in fees. For example, even a single $25 late fee per month will cost $300 extra a year. Set up bill reminders and keep your checkbook balanced. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="87" data-vars-position-in-unit="89">Flickr:</a><a href="http://www.flickr.com/people/alismith44/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" aliwest44" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/alismith44/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="88" data-vars-position-in-unit="90"> aliwest44</a>)
25. Expensive Cell Phone Plans(05 of29)
Open Image Modal24. Not Using Coupons(06 of29)
Open Image Modal23. Oil Changes(07 of29)
Open Image ModalCars don't need oil changes as frequently as they used to. If you're getting your oil changed every 3,000 miles, you're probably doing it too often (and wasting money). Follow the recommended mileage in your owner's manual. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="76" data-vars-position-in-unit="78">Flickr:</a><a href="http://www.flickr.com/people/rstinnett/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" robertstinnett" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/rstinnett/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="77" data-vars-position-in-unit="79"> robertstinnett</a>)
22. Premium Fuel(08 of29)
Open Image Modal21. Not Taking Advantage Of A 401(K) Company Match(09 of29)
Open Image ModalMany companies will match an employee's 401(k) contribution up to a certain percent. If you're not contributing enough to meet the maximum match, you're losing out on free money. Ask your HR department for information on your company match. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="71" data-vars-position-in-unit="73">Flickr:</a><a href="http://www.flickr.com/people/urban_data/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" urban_data" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/urban_data/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="72" data-vars-position-in-unit="74"> urban_data</a>)
20. Bill Pay Convenience Fees(10 of29)
Open Image ModalSome online or over-the-phone bill payment services come with fees. For example, my electric company charges $2.95 to pay online through their website. Instead, I use free bill pay through my bank. I still get to pay online, but I skip the fee and save $35.40 a year. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="69" data-vars-position-in-unit="71">Flickr:</a><a href="http://www.flickr.com/people/kalleboo/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" kalleboo" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/kalleboo/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="70" data-vars-position-in-unit="72"> kalleboo</a>)
19. Hotel Fees(11 of29)
Open Image Modal18. Paying For Services You Don't Use(12 of29)
Open Image ModalAutomatic withdrawals make us lazy with our money. If you're paying for something each month - like a gym membership, magazine subscription, or streaming service - make sure you use it, or those charges will add up to wasted cash. For example, here are mine:
1. Gym membership - $29.99 per month
2. Netflix subscription - $9.99 per month
3. Popular Mechanics subscription - $1 per month
That's more than $40 a month. I make sure I get my money's worth out of them. (credit:<a href="http://www.flickr.com/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="64" data-vars-position-in-unit="66">Flickr:</a><a href="http://www.flickr.com/people/asiaticleague/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" Asiatic League" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/asiaticleague/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="65" data-vars-position-in-unit="67"> Asiatic League</a>)
17. Ignoring Your Insurance(13 of29)
Open Image ModalBecoming complacent about your insurance can cost you money. Stacy recommends shopping around for new insurance once a year - because when premiums drop or new, cheaper policies are available, no one's going to tell you if you don't ask. Check out our insurance comparison tool to shop for a better rate. (credit:<a href="http://www.flickr.com/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="62" data-vars-position-in-unit="64">Flickr:</a><a href="http://www.flickr.com/people/comedynose/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" comedy_nose" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/comedynose/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="63" data-vars-position-in-unit="65"> comedy_nose</a>)
16. Wasting Utilities(14 of29)
Open Image ModalGrowing up, I got several lectures on leaving the lights on or keeping the front door open and "air conditioning the entire neighborhood." I didn't care too much then because I didn't pay the bill, but now I'm strict with my electricity usage. The result: My summer utility bills rarely top $100. If you've got lights on in a room you're not sitting in, you're wasting money. (credit:<a href="http://www.flickr.com/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="60" data-vars-position-in-unit="62">Flickr:</a><a href="http://www.flickr.com/people/emdot/" target="_blank" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" emdot" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/emdot/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="61" data-vars-position-in-unit="63"> emdot</a>)
15. Dining Out(15 of29)
Open Image Modal14. Morning Lattes(16 of29)
Open Image ModalIn my area, a Grande Caramel Macchiato costs $4.55. Buy one every weekday and you'll spend $22.75 a week, $91 a month, and $1,092 a year. By comparison, a 16 ounce bag of coffee costs me $5.99 and I can make about 82 cups per bag. That is 7 cents per cup, a savings of $4.48 a day. Make your coffee at home and skip the fancy coffee-house drinks. (credit:<a href="http://www.flickr.com/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name="Flickr:" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="55" data-vars-position-in-unit="57">Flickr:</a><a href="http://www.flickr.com/people/kansirnet/" role="link" rel="nofollow" class=" js-entry-link cet-external-link" data-vars-item-name=" Kansir" data-vars-item-type="text" data-vars-unit-name="5b9e7f08e4b03a1dcc98f4fd" data-vars-unit-type="buzz_body" data-vars-target-content-id="http://www.flickr.com/people/kansirnet/" data-vars-target-content-type="url" data-vars-type="web_external_link" data-vars-subunit-name="before_you_go_slideshow" data-vars-subunit-type="component" data-vars-position-in-subunit="56" data-vars-position-in-unit="58"> Kansir</a>)
13. Buying Software(17 of29)
Open Image Modal12. Long-Distance Calls(18 of29)
Open Image Modal11. Baggage On Airlines(19 of29)
Open Image Modal10. Full-Priced College Degrees(20 of29)
Open Image Modal9. Credit Reports(21 of29)
Open Image Modal8. Buying Books(22 of29)
Open Image Modal7. Brand Names(23 of29)
Open Image Modal6. 411 Calls(24 of29)
Open Image Modal5. ATM Fees(25 of29)
Open Image Modal4. Credit Card Interest(26 of29)
Open Image Modal3. Bottled Water(27 of29)
Open Image Modal2. Checking Accounts(28 of29)
Open Image Modal1. Cable TV(29 of29)
Open Image Modal