Managing Your Money with Automatic Withdrawals
The American way is to spend everything you bring in. But just because most people in the United States are doing it doesn’t mean that this way of managing your spending is healthy or smart. The best way to manage spending is to have money automatically drawn from your checking account or paycheck to fund those things that are necessities (utilities, insurance, house payments, retirement savings, and so on) or are most important to you. If you don’t put your savings on autopilot, it may not get done, at least not as easily and consistently. Consistency and simplicity are key when it comes to achieving financial success.
What do you currently have set up as an automatic payment or investment? For example, do you have money withdrawn from your paycheck going into your flexible spending account or 401(k) plan at work? What else could you set up to occur automatically out of your paycheck or checking account?
To explore this, list all your expenses: loan payments, insurance premiums, and investments. Then determine which ones you can set up to occur automatically. By automating your payments and investments, your bills get paid on time, every time, saving you hassle and potential late fees, and by investing automatically, you don’t have a chance to spend the money before it gets put to work for your other goals.
Check your bills or statements for a Web site address that lets you sign up for automatic payment. Putting your expenses on autopilot can be a great time and money saver, but don’t forget that you’re still the pilot: Make sure you continue to monitor these payments to make sure they’re accurate.