Best Practice #1 – Automate

Pastor Dave:
It’s a universal problem…there will always tend to be more month left over than money. So, how do you pay for the things that are most important instead of shortchanging the truly valuable having wasted money that should have gone to higher priorities? I’m glad you asked!

I’m not very disciplined…I hate to sit down and pay bills and manage money…but I don’t have to be because I have a system that works for me that insures I pay for the most important things first. I’ve shared it with many others, and there’s usually one big question that comes up, and I’ll answer that question here as well.

Here’s our system:
I get paid once a month by automatic deposit. On the first day of the month, I feel rich. There is enough money that day in our account to pay everything in our monthly written budget. But that’s only if we don’t eat out too much, make a few unplanned Wal-Mart stops, etc. You know the dangers.

So, what do we do different than anybody else?

I automate every bill and payment (that I have prioritized) to go out very quickly at the beginning of the month.

The only checks I write during the month are my tithe/offering/Bearing Fruit checks to the church and we write them immediately when we get paid (btw, I would totally automate them, but I don’t want anyone in the church to watch over the course of a month and not see that my family gives to our ministry).

But here’s one important point:

We give what we’ve planned immediately at the beginning of the month…WE DON’T WAIT TO SEE IF WE HAVE ANY LEFT OVER TO GIVE.

Second, I have all bills (including mortgage and utilities) set to go out automatically early in the month.

Here’s a general list of our personal priorities in order

Giving
Food (we’ve started setting aside money in an envelope)

Shelter
Mortgage
Utilities
Insurance
Retirement (Call it saving for a rainy day, whatever)
Entertainment
Cable TV/ Movies / Eating out

So, here’s the deal…by the 6th of the month, our balance is way less than half of my paycheck. In fact, it’s sometimes depressing how low it is, BUT

You need to realize, we have already paid

Our giving, housing, food, utilities, long-term savings, etc.

Quite often, the last week of the month is a spending freeze for our family…no eating out, no renting movies, but that only lasts for one week, and then we feel rich for a day, but the beauty of it is that when we are eating something out of the pantry, and I’m eating Ramen noodles at work (come by and see my drawer of noodles), we’ve already paid everything that was important to us. I love it, and it makes the noodles taste better.

It’s easy to automate. I usually set it up through the billing companies (mortgage, utility, etc.) by filling out a form and sending a voided check. Most banks now let you do billpay through their website, also.

The advantages are:

1. No postage cost.
2. No monthly time spent on regular bills (download your bank acct to Quicken and you are really working it).
3. Never miss a payment (I have an almost perfect credit score — the secret, bills are paid automatically, and I can’t forget).
4. When you automate based on what you value, you are always making sure you’re accomplishing your financial priorities.

The biggest pushback I receive when I share this with people:
“Yeah, it must be nice to know you have enough money to pay all your bills automatically. I can’t automate because I have to manage when to pay utilities, etc.”

My response:

If you have an unsteady income like straight commission, you’re right.

Otherwise, my question is: Have you budgeted that you might not be able to pay your giving, housing and basic utilities, long-term savings? If so, you may need to cut some things out of your budget or find a way to increase income. But if you make enough, then automating just guarantees you pay your priorities first. Manage the short-term end of the month famine by cutting unnecessary expenses (pretty much all of them since you’ve automated the important stuff) for one week, and rest easy that all your priorities are already paid.

Can anybody improve on this idea?

Comment below! I’d love to hear from you.