A big part of learning how to manage your money better is to learn how to properly manage your bills. Believe it or not, most people don’t plan to pay their bills in advance. They actually wait for the bill to show up before they even think about paying it. While this can work if you are really well organized and also a good saver, there are many breakdown points in this type of system that are likely to cause late or missed payments over time. And remember, late or missed payments can crush your credit and cost you thousands in higher interest rates and lost opportunities over your lifetime. Here are some of the key things you should do to manage your bills.
Start by making a list of monthly bills. The first thing you do is to make darn sure that you don’t forget to pay any of your monthly bills. Luckily, monthly bills are the easiest to plan for because not only do they come once a month, but they come on the same day each month. To manage these bills, start by creating a list of each bill and the day that it is due. Personally, I like to do this on a spreadsheet. That way you can easily add and subtract bills as they come, as well as easily organize them by date. Once you have your list of monthly bills in your spreadsheet, add in the date of each month that you receive the bill, and when the payment is due. You’ll find that most bills have a two week grace period before they are due. What that means to you is that you can usually organize your bill payments into just two times a month. These times can often be the end of the month and the middle of the month. To help you get a list of your monthly bills, you can usually go to your online banking account and look at your past payments made. If you don’t use online banking to pay all your bills, make sure you look at your online bank account and your check register.
Also a note about getting ebills. ebills are basically online notification that a payment is due. They are also called paperless statements. While I find the concept of these very useful, I don’t personally use them because when I did use them I often neglected to get the email notification that the bill was due and some bills slipped through the cracks. However, if you have the system I’m describing set up right, you shouldn’t need an email notification to remember to pay your bills.
Next, add in quarterly and annual bills. After you’ve finished making a list of your monthly bills, it’s time to add another section to your spreadsheet that includes quarterly and annual bills. By listing these seperately, not only will you be able to remember that these bills are coming, but you will be able save for them in advance. After all, there isn’t much worse than seeing a bill in the mail that you had totally forgetten about. Annual bills and quarterly bills include such things as property taxes, income taxes, insurance premiums, garbage and water bills, and many other household expenses. Once you’ve got these listed on your spreadsheet, you should sort it by the date that each bill is due so that you can add it to your monthly checklist so that you can make sure you manage your bills and don’t miss any of the payments.
Finally, create a system to manage one-off bills. One-off bills include such things as services that you get billed for. For example, car maintenance, contractor bills, medical expenses, and other maintenance and one-off services that you buy but not on a regular basis. These bills can’t be accounted for in advance, so you need to come up with a system so that you don’t ever miss paying them. I recommend using a good old fashioned system such as an “inbox” to collect these bills when they come. Most bills get lost because they are misplaced. If you have a system that doesn’t allow this to happen then your bills won’t get lost. By creating a system that gets your bills from the mailbox to wherever it is that you pay your bills, you can ensure that you don’t forget about the bills. Whatever system you use, make sure that the rest of your family is helping you with it.
Consider automating your bill reminders. One more step that you can take when managing your bills is to set up automated bill reminders. For example, you can put reminders in your calendar program that automatically email or text you each time you are supposed to make bill payments. If you have consolidated your payment schedule down to two or three tiems a month, you can use these dates to add to your calendar. Or, if you use a budgeting software program like Quicken or Mint, you can set up automatic bill reminders in those programs. Finally, you can even set up automatic payment for many of your bills. Either directly through your online banking or directly with the company.
Whatever you decide to do, just make sure that you have a solid system in place that can help you manage your bills. What works for someone else may not work for you so it’s up to you to find out what works for you.
Care to share how you manage your bills?