Nobody likes paying bills. They’re tedious, expensive, and often fall at inconvenient times of the month. I can’t even begin to count how many times I’ve tucked myself into bed and then thought “Wait, was the cable bill due today?”That was all before I made one of the best financial moves ever: learning how to auto pay bills online.
First – Why You Should Auto Pay Bills Online
I used to pay my bills the old fashioned way – I’d sit down every month, write out individual checks for each bill, and have to remember to mail the envelope or get charged with late fees. This was a simpler time….or so I thought. Now that I’ve got auto-billing set up, I can safely say that it is the easiest part of my financial routine.
It’s so easy to set and forget it, plus I never have to worry about missing a payment! Some like to manually make sure the money leaves the account and that everything is paid on time, but honestly, with running my own business, I like having one less (or in this case 20 or so since that's how many bills I have) thing to cross off my monthly to – do list.
How to Auto Pay Bills Online and Drastically Simplify Your Life in Three Steps
First, Calculate Your Expenses
Your first step should be to figure out what you’re usually spending each month on bills. This should be super easy if you’re keeping a budget – or using an automated tool like Learnvest, but if not, just write down your monthly recurring bill payments, the ones you pay every month like clockwork (rent, utilities, car payment) and total them up. Use the Financial Best Life free budgeting template if you'd like a jumping off point.
Second, Open a Separate “Bill Pay” Account
Then transfer this set amount either once a month or bi-weekly into a separate account plus a little extra just in case of emergency. This is called a “money cushion” instead of a formal emergency fund. Read about the difference between these two here.
FYI: I keep about $200 in my separate bill pay account for any unexpected overages.
I've long touted separating out my bank accounts: one for bill pay and one for spending, as one of the best financial moves I've ever made.
Third, Set Aside A Chunk of Time For Sign Up
I’m not going to lie, setting up auto-pay is a little time-consuming on the front end. This is mostly just because you have to sign up for online services with your utility providers (and any other monthly payments you make.)
Set aside a few hours on a Saturday or “off” day to get everything set up. Most companies will allow you to set up auto-drafting from your bank account directly, or you can set up automatic payments through your online banking portal as well.
Pro Tip: This is also the perfect time to do a bill audit and see where you can cut expenses. Read how to do this here.
Fourth, Automate Everything and Turn it All “On”
Once I got everything set up….. I decided to automate a few more things. I set up a monthly automatic transfer from my main checking account to my new bill pay account, and a similar transfer to my savings each month.
Related: 8 Ways to Quickly Build Up Savings
Learning how to auto pay bills has greatly improved my financial habits. I’m no longer missing payments or worrying about due dates, and my savings are growing without me even having to think about it. I think it’s a great way for beginners to take control of their finances in a worry-free way.
Have you automated your bill pay? Tell us about it in the comments!
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