Buzz
It’s that time again: the beginning of a new month, and your bank account takes a significant hit with multiple automated payments hitting all at once. Rent, utilities, subscriptions, loan installments—when all processed together, they can seriously drain your account. A better approach? Distribute these auto-payments throughout the month, so you don’t face a financial blow all at once.
Compile a list of your automated payments
First, if you haven't done so yet, it's a good idea to automate your finances. This includes everything from credit card bills to rent, even retirement savings. Start by making a list of all your recurring payments and note the dates they typically withdraw funds each month. Be sure to distinguish between fixed expenses like rent and car payments, and more flexible costs like your entertainment subscriptions.
Focus on essentials first.
Identify fixed payments with set due dates, such as rent, mortgage, car loans, and minimum loan repayments. These are typically due at the beginning and middle of the month.
Distribute the remaining payments.
Next, allocate more flexible bills (like utilities, Netflix, or your gym membership) evenly throughout the rest of the month. Many service providers let you select a payment date, so make sure to utilize this option. Below is a sample schedule to help prevent your bank account from taking a major hit on the first of the month each time.
Second of the month: Once your paycheck is deposited into your checking account, immediately allocate approximately 10% to your 401(k).
Fifth of the month: A recurring transfer is made from your checking account to your savings and Roth IRA.
Seventh of every month: Your automatic credit card payments (and other bills) will be deducted.
Payday reminders
It's also helpful to ensure that larger payments are scheduled a few days after your payday. This creates a financial buffer and helps prevent overdrafts.
Manual checks
After your auto-payment is processed, make sure to double-check that the transactions were completed as expected. By familiarizing yourself with the dates and amounts of your payments, you’ll be better prepared to spot any errors while reviewing your recent transactions. Although automation simplifies things, some payments could end up costing more than you anticipate.
