The number one cause of personal finance ruin is procrastination, and the number one cause of procrastination is fear of failure. So if you find yourself watching Brideplasty instead of balancing your checkbook, deciding which expenses to cut, or updating your retirement savings plan, here are some tips for making those tasks less daunting.

Procrastination is key to credit card debt, financial disaster

Automate Your Finances to Spend Less Time Managing Your Accounts

Despite how simple the process can be, most of us are terrible at saving and paying bills. Here's a strategy to effectively automate most of your finances to keep you saving and out of late fee trouble.

Ramit Sethi of I Will Teach You To Be Rich.com has put together a system for managing your personal finances that only takes about an hour of your time each week. The video above fully explains the process in detail, but here's the gist. First, you want to set up your bills and other payments so they're all happening on the day you get your first paycheck of the month (the first of the month for most people). Once you have that in place, you want to set up automatic savings plans (Sethi suggests using Ing Direct) with sub-savings accounts that let you organize your savings into specific categories (vacation, wedding, etc.). You'll also want to send a percentage of your paycheck to your 401k, and have all of this happen immediately so that the money you see when you get paid is the money left when everything has already been saved. From there, you automatically pay as many bills as you can with your credit card (and then pay the credit card bill on pay day). For the bills you can't pay with your credit card (like rent, in most cases), you can use your online banking to automatically issue a check. This will leave a little money leftover in your checking account that you can use to budget for guilt-free spending and cash withdrawals.

As someone who's often fallen victim to the faults of automatic payments systems (despite frequently using them), definitely do not forget to stay on top of your bills nonetheless. Make sure you set some time aside at least once a month to do a little maintenance and make sure there are no bugs causing your automated finance system to break down. Sethi isn't suggesting a set-it-and-forget-it automated finance system by any means, but as someone who hates paying bills I know how easy it can be to procrastinate and ignore the task. If you set up a good automated system like this one, you'll be at a point where all you have to do is watch and fix the occasional problem as the most important things are being taken care of for you.

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Wednesday, 8 December 2010

personal finance budgeting

Automate Your Finances to Spend Less Time Managing Your Accounts

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