Yahoo Finance The 1 hour task that will save you thousands
Want to save $50.19 with the press of one button? Change your air conditioner temperature.
Increasing the air conditioner temperature from 22 degrees to 25 degrees would save the average Australian household $50.19 over the three months of summer and hundreds over the course of the year.
It’s one of the smallest and easiest ways we can automate our lives to save money, but according to Lady’s Finance Club founder Molly Benjamin, there are literally dozens more.
And those who aren’t taking advantage of the automation shortcuts, savings hacks and strategies are not only wasting time, but money.
“If you value your time at $600 every single day, and you’re spending a couple of hours every week or every month [paying bills and ordering items] that could be the equivalent of $2,000 of your time that you’re spending trying to get all of your stuff together, when it could all be automated,” she told Yahoo Finance.
WATCH: Molly Benjamin discusses how to set financial goals you can actually hit.
“If you’re your biggest asset, and you’re your biggest earning capacity, then you don’t want to be wasting time on that.”
Okay, I want to automate my life. Where do I start?
Benjamin said the place to start is by setting an hour aside and pulling up the physical bills for your major utilities and fixed expenses.
That means your rent or mortgage, power bills, phone bills, car registration, insurance and even superannuation.
“We get so many people at Lady’s Finance Club who never look at their bills. They just pay them,” she said.
However, it’s important to properly look at the bill as companies do make mistakes, hike prices or change services and you need to be across that.
“And then have a look at the different pay methods. This is the thing with bills – they have different pay methods. Usually they have direct debit, Bpay, telephone or in person and Post Office.
“When you see the direct debit or the Bpay, you can automate your payments using those details.”
To do this, you set that up with your bank account.
A lot of your suppliers will have different billing schedules, whether that is weekly, monthly, quarterly or even annually.
Then, you can choose whether you want to set up a direct debit allowing the service provider to withdraw the money from your bank account, or if you’d prefer to make a recurring payment from your credit card.
Either way, this will require a chat with your service provider, or you can set up the direct debit through your bank.
The best thing to automate
Benjamin said her favourite thing to automate is her budget. She’s a big believer in the importance of paying yourself first.
That means ensuring that at the end of every payday, you’ve allocated a portion of your pay towards ‘yourself’, or your ‘future you’ account. That could go towards savings or investments.
Then, you allocate money towards your bills, living and fixed expenses.
Once you’ve done that, you then allocate money towards discretionary spending.
Benjamin prefers to split it three ways: 50 per cent for living expenses and bills, 30 per cent for discretionary spending, and 20 per cent for savings and investing.
“If we save what’s left after spending, it’s likely we will never have anything to save and this is definitely something I learnt the hard way,” she said.
“I was working in a corporate job for a bank, and I was spending… everything, every single paycheck. I wasn't putting any money aside to pay myself first.
“I worked for a whole year and I had saved mere dollars, which was crazy.”
She had to sit down with herself and say: “This is not cool.”
You can automate this sort of structure by arranging to have a certain portion of your pay transferred into a separate account for your ‘future you’ fund every time the pay packet hits.
If you want to, you can also arrange to transfer set amounts into your investments too.
Best automation apps
While most automation can be done through the service provider or your bank, there are some apps that can help you along the way.
“I love all of the budgeting apps,” Benjamin said, calling out Pocketbook and Money Brilliant as great apps.
She said CommBank also has a concept called “Bill Sense” which means bank customers are alerted when a bill is coming up and needs to be paid.
“Likewise with the budgeting apps, they will let you know when you have a bill that needs to be paid, so you can check the account has enough money in there for it to be paid.”
A word of warning
When it comes to automating your finances, having enough money in your account is absolutely critical.
If you don’t have enough in your account when the direct debits hit, you’re looking at some hefty dishonour fees, late fees and in the case of insurance, it could even trigger policy cancellation.
That means that even though you can “set and forget” some parts of your finances, you need to ensure that there is always enough money in that account.
Benjamin warns against arranging for the direct debits and payments to be paid on the same day as you are paid, as a delay in your payday could wind up being very costly.
Additionally, she said automating your finances isn’t licence to forget about everything.
Mortgage rates, insurance rates and the deals you’re getting on your internet and mobile phones change regularly, so you need to schedule in regular check-ins with your payment obligations and check whether you’re getting the best deal you could be.
Author of personal finance book Kill Bills! Joel Gibson saved $6,000 on his yearly household bills with six phone calls. He believes Australians need to spend at least one day a year combing through their bills and changing to get a better deal.
It’s something Benjamin strongly agrees with. “It’s a really good opportunity to look at all your suppliers, call up and negotiate with them,” she said.
“It doesn’t take long at all, but it can save you so much time in the long run.”
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