Automatic payments: Pay and walk away
A big change happened to me financially in 2004. I moved in with my girlfriend (now my wife) into an apartment just off K-Rd in Auckland City.
The financial shift came from having to pay rent and all the bills that come with living under the safety blanket of your parents.
We set up a joint account that we each paid money into from our own bank accounts, covering our outgoings each week. We adjusted the amount every week depending on what we roughly calculated would go out that week.
We maintained separate accounts which our income was credited into.
Each week we would sit down and manually pay each bill that was due (we thought this way we'd miss no payment by mistake). We had it completely under control…
Or so we thought.
We started regularly needing to top up the joint account to cover bills that we forgot about. We both checked our online accounts 5-6 times a day each because we didn’t want to go into overdraft... Repeated daily, this created real anxiety surrounding our finances.
Finally after a decent fight about why I bought my lunch every day and other particular spending habits, it dawned on us that our fighting wasn’t because of what we were buying, it was because we had no control over our bank account. Something had to change...
The first thing we did was make our joint account our main transaction account. We also created two more accounts, one each, at the same bank that was home to our “Go Crazy” accounts. Go Crazy accounts remove the angst that some couples feel when they have very different spending habits.
Next, we downloaded our entire transaction history from the joint account to analyse our expenses over a 12 month period.
By calculating how much we spent over the year and then splitting it up into weekly amounts - we were able to work out exactly how much we needed in the joint account each week. This meant that all our bills and rent were covered without having to think about it!
As we started to add to the account, the balance would build up so when annual bills came around like the rego for the car there was enough money to cover it.
We then moved everything onto direct debit so that the payments would go out every month without our intervention.
The beauty of this system was that we completely removed the need to check the accounts every day. Our anxiety around paying bills disappeared over night.
We started minimising our internet banking time to 30 minutes a week, which turned into 30 minutes a month, which is now more like 60 minutes every three months (when we review our budget).
You too can remove some anxiety from your life by automating bill payments and covering costs without having to think about it.