In our digital age, we have access to all kinds of convenience when it comes to our money. But while convenience can be a huge help in terms of time management, it can also be hard to keep a handle on the money management.
“Automatic payments may be a great option if you live a busy lifestyle. However, often these payments are attached to credit cards,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“You should be tracking these payments on a daily basis. By the time the end of the month comes around, it’s too late. Automatic payments can contribute to debt overload when you factor in the interest for credit card balances that roll month to month,” Schwartz explains.
Here are some tips to take advantage of the convenience of automatic payments while sticking to responsible money management practices.
Some pros for automatic payments
In addition to convenience, there is a higher chance that your bills will be paid on time every month with automatic payments.
One automatic payment service you should absolutely be taking advantage of is automatic savings. It can be hard to have the willpower to sock away savings every month, but if you’ve got money being taken right off your paycheque, it’s seamless and you won’t even notice it. You will notice the balance in your savings account as it grows though! Many workplaces offer this service or you can arrange this through your bank as well.
Is it in the budget?
When it comes to signing up for automatic payments for your bills, you’ve got to ensure that you’ve got the cash earmarked in your budget. Are you paying cable, internet, magazine subscriptions, gym fees etc. on your card? Is this a cost that makes sense in your budget? You have to commit to paying these off every month.
As a rule of thumb, only include your basic budget payments with automatic pay (i.e. utilities, etc.). Don’t use credit for “extras” because you could be blowing your budget and not even realize it.
Like other items of convenience, automatic payments often come at a cost. Are you paying extra fees?
Even though you are effectively removed from the payment process when your bills are paid automatically, you’ve still got to manage it. That means reading statements, double checking due dates, verifying amounts and following up to make sure that things are done properly.
You’ve also got to track these payments, much in the same way you would if you were writing cheques.
Again, digital dealings with your money are super convenient, but they also present a new layer of vulnerability.
Don’t let yourself be a victim of identity theft. Make sure the merchants and companies you are dealing with are reputable and have solid, verified security in place to protect your personal and financial information. It’s prime striking ground for cyber thieves, so you have to proactively protect yourself. Make sure passwords are not easy to guess and always log out after you’ve been online.
Could automatic payments be a good money management tool for you? Are you interested in learning strategies on how to better balance your budget and pay down debt? We can help you get started. Contact one of our trained credit counsellors at 1-888-294-3130 or visit our free online debt analysis.