Many people consider paying monthly bills an evil, but a necessary one, so
they make the most of it by creating a monthly ritual.
This isn't a bad idea at all, but what if you don't find time for the ritual one
month? Or for two months?
What if your monthly schedule gets changed by holidays, or travel, or a work
deadline? Or worse, what if disaster strikes and you or a loved one have a
health emergency?
The last thing you want to worry about is whether your bills are getting paid.
I'm Sarah Lewis, Family and Community Development agent of the University of
Alaska Fairbanks Cooperative Extension Service in southeast Alaska.
I'm also an experienced bill payer. In fact, my ritual has always included a cup
of tea. But late fees, increased interest rates, and a reduced credit score are all
risks if you put your bill paying off, even for a week.
Fortunately, there is a reliable and easy way to get out of this monthly rut, by
automating your finances. The main tools you'll use to do this include: first,
automatic deposit. If your employer offers automatic deposit, sign up. If you
receive social security or retirement funds, your monthly checks are likely
already deposited into the bank automatically. Second, use the bill
payment system at your current bank. Signing up for your bank's bill pay
system is best for bills that are the same amount each month.
There may be a monthly fee for this service, but it will be offset by a
reduced need to buy checks and it pays for itself
if your current bill paying method sometimes results in late fees or higher
interest rates. Third, consider using your current credit card. Asking your payees,
your goods and service providers, to automatically charge your credit card is
a good option if the amount is variable each month. And of course, this works best
if you pay off your credit card bill monthly. The fourth tool is if some payees
can pull or transfer payments directly from your bank account.
This is typically possible between financial institutions, such as your
credit card company and your bank.
I find it's easiest to automate your finances in four steps. Depending on what
will work best for you,
these four steps can be done quickly, over a few days ,or slowly over four
months.
For example, month one some time this month,
go to your bank and sign up for their online bill paying service. At home,
download their application to your phone and bookmark their website on your home
computer.
Also, this month ask your employer or your company's HR or finance department
about their direct deposit options and sign up.
Remember, often you can deposit your paycheck into more than one account.
This is a great way to automate deposits into a savings account. Month two.
When you're ready to pay your bills this month do it the way you normally do.
Whether all at once, or as they each come in, but at the same time
log on to your bank's online bill pay website and have your credit card
information available. For every fixed-amount bill you pay by check,
add that payee to your bank's bill pay service and set up a recurring
payment starting the very next month. For every variable amount bill,
go to the website of the payee and see if they will charge your credit card
automatically each month, and set this up either online or by phone. For payments
within your own bank or to other banks or financial institutions, like credit
cards or mortgage companies, you can often set up automatic online payments
and transfers between accounts or between banks.
Remember that this is an especially good thing to do if you are paying for any of
your bills by credit card. You want those credit card amounts to be paid off
quickly so you don't pay interest. Month three. This month
monitor your bank's bill pay system and your credit card to make sure all the
payments are sent on time.
Make any changes that seem needed. Month four. When all of your monthly bills
come in,
check them each to ensure payments were sent and received on time. If not, again
make the necessary changes. After this, monitor every few months until
everything is running smoothly.
So, to recap, tools you can use to automate your finances include: automatic
deposit, your bank's bill payment system, your credit card, and transfers between
financial institutions. The four steps you can take to automate are: set up
direct deposit into your checking account,
download your bank's online banking app, bookmark their website, and sign up for
the bill payment service. Two, start up the automatic financial tool appropriate for
each payment.
Three, make sure the first payments are made correctly. And four, monitor payments
periodically to make sure everything is running smoothly.
Once your finances are automated, you can relax, maybe with a friend, while drinking
that cup of tea.