The key to successful financial management is developing a few good money habits like savings before spending, paying bills on time, investing for the long term so that compounding can work its magic and so on. But in today’s hectic life where everyone is busy working and handling multiple chores, unfortunately, money management takes a back seat and one is not able to keep track of all the bills, investments, etc.

The commonly suggested solution for such scenarios is the automation of your finances. This means setting payments of your bills and investments on autopilot so that you won’t have to remember all your due dates and can avoid timing the market. You could do it with just a few clicks. Fintech or Financial Technology is the new “in” thing and new apps are springing up left, right and center. But, here’s the thing: If your income is irregular or if automation for you means “set it and forget it”, then this solution can cause more harm than good.

Undoubtedly, there are many benefits of automating your finances. You won’t have to pay the penalty plus interest ever again just because you forgot to pay your bills on or before the due date. You can take advantage of rupee cost averaging by investing via SIP’s, along with the benefits of compounding. Also, this helps in keeping your emotions at bay and you never fall victim of not investing at all. Having said that, there are some downsides as well of automation which you must take care of for better financial future :

1. Danger Of Overdrafting Your Account
   It’s important to consider your cash flow before you start automating your finances. Otherwise, instead of saving money by never paying late fees, you might end up paying overdraft fees. The easiest way to overcome this hindrance is to set your withdrawal dates after your inflows date and not before that. Also, if you struggle with overspending or have irregular income, make sure that you don’t follow the set it and forget it rule, or this automation will land you in trouble. Make sure that you are aware of how much money is available in your account at all times so that you can avoid cases of overdraft.
2. Losing Touch With Your Spending Habits  
   Automation is designed for convenience but it also makes one lose sight of spending patterns, which can play havoc with your budget and financial goals. Make sure you go through your utilities and credit card bills thoroughly even after setting them on autopilot, to figure out any unnecessary expenses which could be reduced or eliminated easily. Automating your finance doesn’t give you a licence to be financially lazy. You have to be responsible with your budget and spending to enjoy the benefits of auto-debits.
3. Missing Out Savings/Investment Potentials
   Investments via SIP or STP are one of the best and most productive results of automation. But it can also lead to stagnancy if you just set it and forget about it. You must adjust your investments to match changes in your financial situation to make sure that money is not lying idle in your bank account. If there’s an uptick in your income (congrats!) make a proportionate change in your investments as well.
4. Overlooking mistakes Or Irregularities
   Automation means that your bills and other payments will be paid, whether you inspect them or not, and many people do forget to review the same regularly. This results in overlooking of mistakes, fraudulent transactions, duplicate charges or in some cases: misuse. Make it a point to review your transactions monthly to make sure that everything is in order and no suspicious transactions are reflecting in your account.
5. Spending on Irrelevant Expenses
   This should be a no brainer by now if you are a regular reader of this blog. Automation of subscriptions is a trap that you should avoid. You might end up paying a large amount of money for services you have stopped using or lost interest in a long time ago. There could even be a situation where a service provider increased the fee and you were unaware and kept paying.

Automation is definitely a convenient solution but to make the best use of technology, stay on top of your finances. Keep looking for any errors and track your spending habits along with any changes to your financial position.

If you can, go for automation with notifications only.