I decided to write about this topic because i think it is crucial to explain why i have struggled to deal with debt in the past. The fact is i am badly organised, and the failure to organise my repayments and have them automatically processed has slowed down my journey out of debt. It has also cost me extra money. So i decided to examine how to place your financial affairs on auto pilot.
This should be the first thing you do, to be honest. To state the obvious, by automating your payments, you do not forget to pay, and thus do not miss a payment. I have forgotten to make payments in the past because I was doing it manually. This meant a £12 charge usually and no lowering of my existing debts. To ensure you have enough money to pay these automated repayments, write down what will come out during any given month. You can then monitor your balance and try to ensure the funds are there. If you foresee a problem, you give yourself time to act. You can also do the maths to figure out how much your fixed expenses are. Then set that amount aside. The rest is yours to spend as you see fit. To simplify things a tad, you can also pay your bills with a credit card. This only works if you designate a single credit card to paying your bills, and that you pay the balance in full each month. Instead of a bunch of transfers out of your bank account throughout the money, you only need to pay a single bill.
We all love to see our wage drop into our bank account. Relief and a bit of leeway with life’s expenses! You have to be sensible though. This is not an excuse to go wild. It must last the month. When i was younger I used to receive a yearly bonus. I was irresponsible, and spent half of it immediately, when it should have been used as part of my wage.
It really helps me to figure out how much I can roughly spend each day on non-important stuff. How much I have for variable spending is determined after all my bills and saving goals are accounted for. What’s more, it gives me a good feeling and makes me more determined when days end and I have spent well under the total. Having a total helps you avoid stressing over every little expenditure, like how much to spend on lunch, or whether you can afford that frying pan you like.
If you’ve been working on lowering your living expenses, put the extra money you saved towards building up some savings. Or at least use the money to lower existing debts. auto savings.
I have many a side project that earns me a few pounds here and there. Extra content writing, book sales and survey taking. I try and put these earnings to good use, rather than considering it money to burn. I do not earn enough to take that attitude to life. Of course, only do this if you have money to spare. If you ave debt, then paying that off should be your priority. Prioritise where your money goes, so it benefits you the most.
If you work for someone else, UK law demands they must have a pension scheme. They will match what you contribute, so try and put aside as much as you can. However, ensure you have enough elsewhere to live your normal life. The beauty of setting your finances on autopilot is many. If you can’t see it, you won’t spend it. Auto saving means fewer decisions you have to make about your money. Plus, it means the rules and systems you’ve set in place for your finances overrides any bad habits or behaviour you have with your money.