You know the drill: It’s the start of a new month and suddenly your bank account takes a huge hit from multiple automated payments all on the same day. Rent, utilities, subscriptions, loan payments—taken all at once, it’s a devastating blow. Instead of letting your account drain all at once, a better system is staggering your auto-pays throughout the month.
List out your auto-pays
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First things first: If you haven’t already, you should automate your finances. Credit card payments, rent, retirement contributions—the works. Make a list of all your automated payments and when they typically hit your account each month. Note essential expenses like rent and car payments versus more flexible subscriptions, like your streaming services.
Prioritize necessities
Mark the fixed expenses that have set due dates like rent, mortgage, car payments and minimum loan payments. These should hit at the start and middle of the month.
Spread out the rest
Now schedule the more flexible bills (utilities, Netflix, gym membership, etc.) evenly across the remainder of the month. Most companies allow you to choose a payment date, so take advantage of this. Here’s a sample schedule so that your bank account doesn’t take one big hit on the first of the month, every month.
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On the second of the month: As soon as your paycheck is direct-deposited into your checking account, a portion of your salary (around 10%) immediately goes your 401(k).
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On the fifth of the month: A recurring contribution transfers from your checking to your savings account and to your Roth IRA.
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On the seventh of every month: Your credit card (and other miscellaneous bills) auto-pay goes through.
Match paydays
Another tip is to try to ensure some larger payments fall a few days after your paycheck deposits. This gives you a cushion and avoids overdrafts.
Review manually
After the scheduled auto-pay date, check in to confirm the transactions occurred as planned. Internalizing the dates and amounts of your payments will help you stay alert when you’re glancing over your recent transactions for discrepancies. Because while most automated payments make your life easier, be aware that some might cost you in the end.