Over the years, I’ve learned that some aspects of managing my money work better when I automate them. But automating the wrong things gets me into trouble.

The bottom line to managing your finances is this.

Your money is  your responsibility and nobody elses.

It’s a responsibility which will reward you handsomely when you do it well. And when you screw it up, it’ll make your life miserable.

The key word is responsibility.

I know. That word doesn’t give you the warm and fuzzies. But the alternative is a lot worse.

What is automation?

Software and web sites of all sorts offer ways to make it easier to manage your money. Anything that you can set up to happen automatically or on a schedule is automation.

You can’t automate responsibility

Anything that takes away responsibility also takes away control. And less control over your money is bad.

Automatic bill pay

Paying bills is two responsibilities

1. Make sure you have the funds to pay the bill
2. Make sure the payment arrives on-time

Think about this:

• Your bank makes money (via overdraft fees) when you overdraw your account.
• Your creditor makes money (via late charges) when you pay late.
• Billing cycles often don’t line up with the month (sometimes they’re every 28 days or so), making them hard to automate on a schedule.

So when you screw up, it can cost you a lot in fees. And everyone else has an incentive to allow you to screw up.

Overdraft protection

If you don’t have the funds, you shouldn’t be spending them.

If you delegate the responsibility for ensuring that there’s money in your account to cover a charge you’re opening yourself up to unexpected charges and additional fees. Don’t do it.

You can automate busy-work

Automatic transfers

I’m a fan of envelope budgeting. My envelopes are checking accounts.

What I’ve found automation to be really good for is automating transfers from my main checking account (where my paycheck gets deposited) into my envelope accounts.

There’s no risk of overdrawing on these transfers because I’ve set up the transfers to happen on the 1st and 15th of each month, the day after my paycheck arrives via direct deposit.

Scheduled reminders

There’s nothing at all wrong with sending yourself a little reminder here and there. Just don’t get in the habit of ignoring them.