The Automated Life
I was reading a post by new Twitter friends oXYGen Financial (@oXYGenFinancial) about the pros and cons of putting bills on autopay, and I thought I'd contribute my two cents.
Our money takes us on a journey. Some parts of that journey are interesting and worthy of exploration, other parts are simply scenery that we pass by on our way to somewhere else. Putting bills on autopay puts them in the scenery. Which has advantages - do you really want to be examining every tree and mile marker? Not only could that get pretty dull, but it could also take energy and focus away from other parts of your financial life that would benefit much more from getting your attention.
When coaching people on developing financially healthy behaviors, I tend to start with a thorough examination of all expenses. Each expenditure tells us something (my mantra is "All financial behavior has meaning," and what you spend money on reveals a tremendous amount about you). So yes, I want to know why you chose that cable plan, or why you live in that apartment. I've been known to get lost in the story of when you stop for coffee. When you're at the beginning of the financial wellness journey it's not just every tree and mile marker, but even the blades of grass get at least a cursory glance.
However, there is competition for your attention, just like there's competition for your money. So after we get a sense of which budget elements need attention and which ones do not, tools like autopay can be immensely helpful. Not only does this feature have the benefits listed by oXYGen, but I would add that you can also avoid late fees and the anxiety of wondering if you've paid something on time. Creating a greater sense of safety around your daily finances frees you up to start working on deeper-level issues.
Automating a spending activity de-prioritizes it in your consciousness. That's fine (again, given the potential drawbacks so excellently listed by oXYGen), but it's not fine if that spending behavior becomes completely unconscious. A routine review of charges helps you keep perspective on what your choices cost. It also gives you the opportunity for a quick check-in that this expenditure is something you continue to value. I can't tell you how many thousands of dollars I've helped people save when they discover a mountain of subscriptions, dues, and other fees they didn't even know they were still paying, or when they pause to notice their Netflix payment despite the fact that they've been holding on to the same three DVDs for six months.
A huge part of financial wellness is learning how to pay attention to money. But attention is a precious resource, and figuring out the best places to apply it is an art. How does autopay work (or not work) for you?