Balancing a checkbook is never easy, but it’s a skill anyone can learn. Our four personal financial planning strategies for success will teach you how to manage bills better.
How to Manage Bills Better: 4 Strategies for Success
- Establish a workspace
Since many different bills are due each month, how to organize your bills is an issue everyone encounters. First, establish a place in your home, such as a desk drawer, to store all of them. This way bills will not get lost nor will you have to waste time looking for them.
- Set a time for paying bills
First, select a working space in your home for paying bills. Many people choose the kitchen table or an available desk. Next, select a weekly time for reviewing and paying bills. It’s not important what time or day you select as long as you commit to setting aside the time. This will establish a healthy routine of reviewing and paying bills regularly.
- Create a spreadsheet
Once you have all your bills in one spot, the next step is to create a spreadsheet (the most common software for budgeting is Microsoft Excel). Start by listing all the companies you are obligated to pay on a monthly, quarterly and annual basis. Then, create columns for amount and due date. Once you have paid each bill, you can simply check it off your list.
- Create a payment calendar
Because it’s always tough to keep track of which bill is due on what day, you need a payment calendar. This calendar, which may be on paper, on a computer or a mobile device, will easily display when all the obligations in your monthly budget are due. It’s important to pay bills on time to avoid late fees and damage to your credit.
Calculate Income and Expenses
When planning a budget, first calculate how much income you earn after taxes each month. Your take-home pay is what you will draw against to pay expenses. Next, knowing how much of each paycheck is committed to expenses helps you learn how to manage bills better. Expenses can be sorted into three categories: fixed committed expenses (rent, mortgage), variable committed expenses (groceries, gasoline) and discretionary expenses (recreation, entertainment). We suggest tracking these expenses on a monthly basis to help coordinate all your bills. It’s is also helpful to include in your budget money to be set aside for an emergency fund. Even $50 a month in reserve funds adds up quickly.
- Set up online bill pay
Online bill pay, which is offered by most companies, is a quicker more efficient way to pay your bills. Without a need for stamps or post offices, you will save yourself time and money.
- Set up automatic payments
Major banks, such as Chase and Wells Fargo, allow customers to schedule one-time or recurring payments to ensure they are received on-time. This added convenience helps guarantee you don’t miss deadlines for your financial obligations.
- Prioritize payments
If money is tight in your monthly budget, you’ll need to prioritize which payments must be made and which can slide a month or two. It helps to develop a strategy before you get in a pinch.
A recommended strategy for how to manage bills better is to keep receipts of everything. This will accurately keep tabs on discretionary spending, which often causes people to exceed their monthly budget. Also, schedule time to check your monthly bank statements. This helps to detect any billing mistakes that could occur.
After you’ve implemented your new plan for a few months, take another look at the financial decisions you have made. For example, ask yourself, if there are bills that could be reduced or if you miscalculated discretionary spending in your monthly budget? Regular budget analysis will contribute to more financial stability.
Once you receive that next raise, you will be prepared for the fun task of re-evaluating and expanding your budget.