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If you are paid twice a month this will make the most sense. If you're an entrepreneur or own a small business it would still be a good idea to divide your bill paying into the first and second half of the month in place of having to pay them scattershot during the month. Find the customer service number for each of your bills then call and ask to have the due date for particular bill changed because you want to batch your bill paying. You should make it either the 5th or 20th day of the month. If you’re paid on the first and 15th of the month this would give you several days for the transfers to go through to the your bill paying account before your bills are paid. As an example of this, you could set your rent or mortgage to be paid on the fifth and all of your other bills on the 20th. That should just about equal out the two payments. One good trick is have a rewards credit card set up to pay your bills so you would earn points and then have its full balance paid automatically every month on the 20th.
#4. Don't turn on automation quite yet
You need to create a savings buffer before you turn on auto-transfer and auto bill paying. You just wouldn't want to set up all of this and then run out of money and create an avalanche of late fees and overdrafts. What many financial experts recommend is that you save up enough in your bill paying account for two months' of fixed and recurring bills before you turn on the system. This assures you that you'll always be somewhat ahead of the game in case you have a bill that comes much higher than you had expected.
Once the money starts going out of your checking account to your bill paying account every two weeks you will want to set up an automatic transfer from that account to your savings account. In the personal finance book, All Your Worth, Elizabeth Warren councils the 50/30/20 rule. This is where you try to keep your fixed expenses to 50% or less of your monthly net pay while putting 30% towards your variable spending and the final 20% into paying off debt and savings. Since you’re now paying your credit cards from your bill paying account you should be able to set up auto transfer of 10% of your income into savings monthly, which means you will soon have a nice emergency fund, a retirement account or an account for some other savings goal.
#5. Now, let 'er rip
Once you have your buffer in place you can now go all in. This means going into your bill paying account and turning it on. You can choose monthly, recurring or pay in full each month for each bill and then watch how your system operates in all of its wonderfulness. Of course, you will want to take a look at your accounts at least twice monthly to ensure that everything is working as you had planned. The good part is that you will no longer have to "manage" your bill paying or think about how much money you want to save that month. This will all have been taken care of for you.
Now, you can have some fun. This is because whatever is left in your checking account after you have funded your savings and transferred enough money to pay your bills is all yours. You can spend it freely and without guilt on whatever you like including shopping, manicures, eating out, movies or whatever. Even if you spend every cent of that leftover money, you will never have to worry about being late or failing to pay a bill. Just as important, every time you make a payment on time and reduce your debt your credit score will get better.
Using automation for your bill paying and saving is like having an invisible robot that ensures all of your bills are paid on time and helps you save money. And once you’ve automated your finances there's really nothing else for you to do except kick back and enjoy lif