We all live busy lives. From working to running errands, to cleaning the house and carting the kids to soccer practice, we have little down time. As a result of having little down time, we choose to overlook or ignore some things in our lives that need to be done. Like weeding the flower beds or even cleaning out the garage. Another area that many of us tend to overlook is our finances. But there is hope. You can automate your finances.
What exactly does automating your finances do for you? First and foremost, it saves you time. When you automate things, they happen, well automatically. You don’t need to remember to do anything. It’s like setting a programmable thermostat. You set it and forget it so that your house or heated or cooled without any effort on your end.
Now before you go running to automate your finances, you have to understand that there are advantages and disadvantages of automating. That is what this post is about. I’ll show you some ways it will benefit you and ways it could hurt you. Your job will be to evaluate both and decide if automating your finances makes sense for you or not.
Reasons To Automate
Ease: I touched on this one above. Once you spend a few minutes getting everything set up, you really have very little work to do going forward. Most of the work is for one-off bills you might have to pay.
Guarantee To Save: When you automate your savings, you guarantee that you save money. I set up a transfer from my checking account to my savings account when I get paid. I do nothing and money automatically goes into my savings account each month.
Save Money: Ever get hit with a late fee from a credit card company? You can say goodbye to that ever happening again when you automate your bills. You just set up when the bill should be paid and it gets paid!
Increase Your Credit Score: One of the major factors at improving your credit score is to pay your bills on time. When you automate, you never will be late with a payment again. As time goes by, you will see your credit score improve.
Reasons Not To Automate
Overdraft: While never being late on bills is nice, you need to have the money in your checking account in the first place. So if you are someone that lives paycheck to paycheck, automating could cost you some money with overdraft fees.
Pay More: Another downside to automating is paying more. When you automate, you won’t look at bills as closely and could end up paying for phantom charges. For instance, every few months our cable bill shows a modem rental fee even though we own a modem and told the cable company this. Nevertheless, every few months, the charge shows up.
Lose Touch: Some people want to know how much money they have, how much is coming in and how much is going out. If you automate your finances, you remove yourself from knowing the intimate details and thus potentially hurting your finances in the long run.
Laziness: Once you automate, you really don’t have a reason to go in and review your finances. So you could start out saving 5% each month and never change this. While saving something is better than nothing, after a few years, you could probably increase this amount to 10% or more and improve your finances greatly.
These are the biggest things to things about when considering automating your finances. If you are on the fence, understand that you don’t need to do an all in approach. What I mean by this is that I automate our savings but not our bills. I still like having some control over money going out and as a result, I don’t automate this part of our finances.
The key is finding a balance that works for you over the long term. If you can find this middle ground, chances are you will stick with it and see your finances improve as time goes by.