This article discusses why you should set up direct deposit and automatic payments for as many bills as possible.
Some banks will waive the monthly service fee if you set up a recurring direct deposit (e.g., for your paychecks). Direct deposit helps to ensure your check is not compromised and that it is deposited in a timely manner to cover expenses that are automatically paid out.
Be sure to pay yourself first, utilizing your retirement plan and savings accounts. In other words, set aside a portion of your paycheck for retirement or other savings goals before you start spending it. If you have access to an employer 401(k), 403(b), or something similar, start contributing now. If you are already utilizing employer retirement plans, consider increasing contributions. You can also set up automatic transfers (e.g., on the date you get paid) from your checking account to your emergency savings account or other savings account (e.g., vacation, big purchases, etc.).
Setting up your bills to be paid automatically from your bank account or credit card can help you avoid late payments that may affect your credit. If you are not in the habit of paying off your credit card monthly yet, you may want to only pay bills from your checking account to avoid incurring debt.
Setting up automatic payments may be time consuming at first but in the long run will save you a lot of time and potential frustration on late payments. Once you get a rhythm going it will be much easier to balance out your accounts. That being said, here are some good practices to help protect your account and minimize errors:
- Review your account(s) regularly to make sure there are no unauthorized charges.
- Balance your bank account and credit card statements at least monthly to ensure there’s not an error made by you or your financial institution.
- Be aware of any overdraft or insufficient fees – sometimes when we automate payments, we might forget to check on the account balance from time to time to make sure we have enough money in the account to cover our bill payments.
Tackling debt can be a daunting challenge, but don’t let yourself worry or become overwhelmed. With some discipline and patience, you can do this! Once you have your debt under control, it will help you feel more confident about your financial well-being. And when you spend less time worrying about debt, you can have more time to do the things you want to do.
Here’s to you…living richly!
References and Further Reading
Clark.com. (2019). Automatic Bill Pay: How It Works and How to Do It Safely
Chopra, Deepak. (2015). How Meditation Can Help Anxiety