One of the recent trends in finances is automation. Thanks to technology, it’s possible to schedule automatic bill payments, and to schedule automatic transfers so that your money is moved from your checking account to your savings account or investment account.
Automated finances can simplify your cash flow so that you don’t have to worry about whether or not you have mailed your bill payment on time. It’s all taken care of. However, automation doesn’t work for everyone. In some cases, automation can lead to problems if your finances aren’t reliable.
When to Think Twice About Automating
With automation, your finances pretty much take care of themselves. You have direct deposit from your job, so your income is automatically added to your bank account. Your bills come out automatically; some credit cards even allow you to schedule your payments so you automatically pay the entire balance each month, or make the minimum payment.
However, there are downsides to complete automation. First of all, if there is an error in any of the transactions, it can mess everything up — and you might not even realize it until it’s too late. This has happened to me in the past. An error can mean that your money isn’t supposed to be where it should be, and that can trigger overdrafts and other problems that tend to snarl up your accounts.
If you have a variable income, or if you are concerned the timing of some of your bills, you should think twice about automating. Unless you can smooth things out a little bit by changing due dates and counting on certain portions of your income, you could be in trouble. The more automation you have, the more chances there are for something to go wrong.
Also, it’s important not to completely ignore your finances. While automation can bring peace of mind, and help you more efficiently manage your finances, the reality is that it can also encourage you to pay less attention to what you’re doing. Automation doesn’t let you off the hook for balancing your account statements each month and double-checking some of your accounts on a regular basis to make sure everything is going through as it should. If you tend to set it and completely forget it, automation might not be the best choice. Perhaps consider semi-automation or some other hybrid that allows you to remain somewhat involved with your money.
My finances have a lot of automation, but I still try to be a little involved. In fact, I reduced the amount of automation in my finances not too long ago in order to make sure I was still paying attention to the more important aspects of my money situation. I track my spending, and I reconcile my accounts so that I am still involved. And when I expect a direct deposit from my husband’s work, I go in and make sure it has arrived in the appropriate amount.
Automation can be great for your finances, but it also comes with pitfalls. It isn’t for everyone.
What do you think? Do you automate your finances? Why or why not?