Don’t Make These Financial Moves “Automatically”

This blog post is in partnership with Metromile Auto Insurance.

It’s convenient, but “setting and forgetting” can be costly. 

A popular saying in the personal finance world is to “set it and forget it.” The idea behind it is that you automate some important money moves like saving and investing so that you stay on track with your goals. Or, you sign up auto-payments for a monthly service thinking you’ve landed a “deal” when there might be far better offers out there.

In theory, this approach has some merits. It reduces time spent thinking and making moves in our financial life. It makes things simple and convenient. Plus, the act of “setting and forgetting” is a proven step to help people save more money over the long run.   

But the ‘forget it’ part can sometimes backfire in the form of cost creep or hidden fees. If I had to edit the expression, I might suggest something to the effect of, “Set it, but don’t forget to check in once in a while.”  

Here are 4 aspects of our financial life that we tend to put on autopilot, but might be worth reviewing on occasion. 

Retirement Savings

This summer I did the forbidden thing and adjusted my retirement portfolio, rather than “stay the course,” as is often advised. It’s an adage that even I, as a financial author and expert, have preached over the years, but in recent months, with so much uncertainty in the world and volatility in the market, began to question the approach. 

I realized that I’m not as bullish about long-term market trends and my appetite for risk just isn’t what it used to be. After some consideration, I dialed back my stock exposure slightly to better reflect my new comfort levels. I realized the trade-off would be possibly falling short of my retirement savings target, so to offset the smaller gains over time, I decided to increase my annual contributions. 

My advice now to long-term investors is to check in with yourself once a year, at least, to be sure that your investment approach is aligned with your goals and risk tolerance. As our personal life and the world evolves, so might the way we invest. And that’s okay. 

Banking
While I’m not a proponent of switching banks just to earn an extra 0.01% on your savings, it might make sense if you’re unhappy with the service or fees. Yet we rarely make the departure. In fact, Consumer Reports found that despite being displeased with their bank due to rising costs and other inconveniences, only one in five consumers made the departure. The hassle of transferring automatic payments, as well as the time and effort, deterred about 50% of those surveyed from doing anything about it. 

I get it. Your bank is a likely long-standing relationship. It’s hard to break up. But I’ve done it. And it’s not as painful as we make it out to be in our minds. Before you make the switch, I’ve written more here about how to get organized and prepare for some traffic control to be sure all inbound direct deposits and outbound recurring transfers get carried over without fail.  

Car Insurance 

The average driver hasn’t switched car insurance companies in 12 years! If you haven’t shopped around in over a decade, there’s a good chance there’s a much better deal out there for you. And rest assured, you are usually able to switch at any time without penalty. 

My husband and I recently made the switch when we moved to a new state. For years we’d been with the same auto insurer, just paying what we paid because, well, we got lazy. The set it and forget it approach just had us following the status quo and not really questioning our bill. 

But when we moved to the suburbs and were working from home, we realized just how little we were driving. We started to look around for more cost-saving solutions and discovered Metromile, a car insurance company that offers pay-per-mile car insurance. This means our bill is based on the miles we drive. We pay a base rate and a few cents per mile. 

With our previous car insurer, our premium was well over $200 a month, and mostly based on aspects like where we lived, the type of car we drove and our driving history. A tiny part of the cost breakdown related to the fact that we were low mileage drivers.

But here’s the truth: More than 100 million Americans drive 10,000 miles or fewer each year but don’t know it. And Metromile customers are big fans, saving an average of $741 a year.

In our case, the savings looks like it will be more than $1,000 a year. You can also see what you might potentially save with Metromile’s free quote tool.

Cable, Internet and other Monthly Plans

With so many people moving and relocating in the pandemic, service providers are offering many new deals and sign-up incentives to entice new customers. Now might be a smart time to make a switch. Even if you’re an existing customer, call your service providers and see if you can qualify for any of the offers for first-time customers. If not, discuss how you might be seeing competing offers and ask, “what are some ways that I can save?” You’d be surprised what customer service can usually come up with to help bring down your bill by 15 or 20%. It costs less for the company to give you a discount, rather than lose you and need to spend more marketing dollars to lure in a new customer to fill your spot.  

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