Last week, our blog discussed how making small financial and health decisions and changes might not work, because many small changes are either sacrifices in disguise, or the effort outweighs the outcome. So this week, let’s take a look at the first and most extensive financial “BIG” decision that can be made with little effort and sacrifice, but can have “BIG” results.
A U T O M A T E P A Y M E N T S
Setting up automatic payments for any type of recurring financial debit or credit can be a very beneficial decision for your financial situation. Here is a list of many of the types of payments you could automate.
Directly deposit your wages from your employer into your bank account
- Credit Cards
- Investments (such as an Individual Retirement Account)
- No more missing payments or making mistakes on payments. Set up automatic payments correctly and your payments will be on time and in the exact amount you want. With direct deposit, your money will be in your account around the same time every pay period.
- More time for the other aspects of your life. The amount of time it takes to set up and monitor an automatic payment (which you only have to set up the ONE time) will most likely be less than what it takes to collect, open, sort, and file the bill you receive in the mail (a process that occurs every month), and that doesn’t even include the time it takes to write the check, tear off and fill out the payment stub, stamp and fill out the envelope, and put the envelope in the mail (whew!). Also, setting up a one-time direct deposit or automatic savings/investment payment can save time and hassle of frequent visits to the bank to deposit checks or transfer funds.
- Save money. You could save on checks, envelopes, ink, stamps, and the cost of fuel used for trips to the store for these items, or the bank to make your deposit. Plus, some institutions offer better account options, waive certain fees, or supply rewards or other benefits for having automatic payments/deposits or emailed statements, because it saves on their bottom line since less paper and less labor is needed.
- Making full payments - on time, every time - will help your credit score.
- Eliminating all that paper and driving saves on the environment.
- Finally, automatic payments have the flexibility to update, change, or cancel your payments with just a brief phone call or a few clicks of a button online.
- If you are interested in direct deposit from your employer, talk to your Human Resources department. For most companies with direct deposit, all you need to do is fill out paperwork and supply them with a voided check, deposit slip, or letter of authorization from your bank.
- In order to set up automatic bill and investment payments:
- You will first need the information for accounts you wish to automate (found on your bill or statement).
- Next, you will want to either 1) Contact your bank and set up online bill pay, or 2) Contact the companies through which you have recurring payments and set up automatic bill pay.
- Any of these steps can be accomplished by making a call to customer service, or setting up automatic payments online.
Where possible, you may want to consider switching to companies which DO allow automatic payments.
Of course, you should monitor automatic payments to make sure they are the correct amounts occurring at the correct time. Log into your online account and look at the most recent transactions. Remember to watch your balances, because you wouldn’t want to overdraft your payment account, or overpay a bill.
For the savvy and experienced auto-payer, you could consider using a rewards credit card to pay your bills, and then pay off the full credit card balance every month. This allows you to earn points/rewards while also making a few monthly payments from your checking account. Again, this is ONLY recommended if you pay off the credit card balance in full every time you make a payment, because you DO NOT want to build up any more debt.
Next week, we will take a look at more of our financial and lifestyle “BIG” decisions that can have “BIG” results with little time and effort. Stay tuned!