If you want to get your money under control for the new financial year, then automation is one of your most important tactics. Here’s why setting your bills to pay automatically and your savings to happen hands-free will make you more secure in the future.
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You’ll have to plan your finances
The core of any sensible budget strategy is knowing what’s coming in and what’s going out. Automation means you’ll know that the bills are always paid on time, but to make that work effectively, you’ll need to know what those bills are, when they occur, and how that lines up with your salary. Making those calculations is the most important step you can take towards being financially organised and in control of your money.
You’ll establish good financial habits
Having created that template for how you’re managing your money, automation means you won’t have to stress over “did I pay that bill or not?” Paying bills on time ensures you have a good credit rating. Similarly, automatically moving money from your regular bank account into a savings account establishes a solid saving history — something that will be extremely useful when you want to apply for a home loan.
You’ll avoid late fees and interest charges
As well as ruining your credit history, unpaid bills cost you money. Many services will fine you if you don’t pay on time, either in the form of a fixed late payment charge or by charging interest (often at very high rates) on the outstanding amount. That’s a terrible way to spend your hard-earned dollars.
You’ll put money out of temptation’s way
Regularly transferring money from your main bank account to a separate savings account means that it’s not available to spend on impulse purchases. Establish a savings account that doesn’t allow easy withdrawals (don’t have it linked to your bank card, for instance). That way, you can draw on the money if there’s a genuine emergency, but not simply because there’s a sale on and you fancy some shiny new trinkets.