Use auto pay to simplify your money management
Review your cash flow before automating
InvestigateTV - Setting up automatic payments for bills could save you money and paying bills easier, but there are a few things you should know before you start.
Kim Palmer, a personal finance expert with NerdWallet, said automating your finances is a good idea because it saves time and eliminates any chance of forgetting a bill and accruing late fees.
However, she suggested an important first step: review your cash flow.
“You want to make sure you have a really solid understanding of the money coming in and the money going out each month before you set up any automation,” Palmer said.
In some cases, you can set the date you want bills withdrawn from your account, which allows you to schedule payments after your paycheck clears.
Palmer said start with bills that are predictable, where the number is reliable and does not fluctuate. She gave examples of condo fees, rent, insurance payments, phone, or cable bills.
Auto-paying bills that can vary widely or seasonally, like utilities or credit card bills, could cause you to overdraw your account, Palmer said. For these types of bills, plan for the variance before committing to automated payments.
Also, Palmer said don’t automate and then just forget about it. She suggested reviewing all the payments coming out of your account every month to make sure nothing has changed and there are no mistakes.
One thing to investigate is whether the business or service your using give discounts or rewards for setting up automatic payments.
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