STOP THINK DO - Part Three

Develop a Plan and Organise a System For Paying Your Bills

If you have bills arriving in the mail that you didn't know were coming or you suddenly can't afford to pay for something else because you have to pay this bill, you are allowing your bills to control YOU, instead of you controlling them.

To prevent this, you must have a plan and you must work your plan into a system.
Firstly, list your big expenses throughout the year. These may include electricity, water, school fees, registrations, insurances etc. If you are unsure when these bills fall, then mark them on a summary sheet which is divided into 12 boxes, one for each month, as they come in through the year. Knowing what is on your horizon will enable you to plan for the larger expenses rather than dreading them when the bill arrives in the mail.

To control the bills I have a system whereby I tally up every bill that I expect to come in throughout the year.

 I look back through old calendars and bank statements to get an accurate list. I then add the total of all the bills for the year. After I get up off the floor and recover from the shock I divide this amount by 52 or 26 if you work on a fortnightly budget and then know that this is the amount that I have to put aside.

My version of "put aside" is to transfer it into an account that is only for bills. I don't touch this money, except for bills. Depending on how much control you need over your finances, you may choose to have a plastic bag for each bill, whereby you put $20 a week into the electricity bill bag etc. Some people choose to do a bpay electronic transfer to each company so by the time the bill comes in, the amount is in credit or close to zero.

The choice is yours.

The only rule is that it has to be "a system" that is, something that is not too complicated and works for you. If you are the type of person that simply can't have cash on hand because you are impulsive then don't choose the method where you hang onto the cash. You would be better of paying each company a small amount each fortnight.

When a bill comes in I write the due date on the calendar and the amount. I then have an "unpaid bills" clip that stand on my desk. One of my jobs on Mondays is to look at my budget and pay any bills. I pay the ones that are due in the upcoming week. I also write a list of bills that I have paid so I can see at a glance how much variance in, for example, mobile bills over the past few months.

As you know from my previous posts we work on a cash only basis for our day to day expenses and for our savings. See my previous post for how I actually do this.
http://avisionsplendid.blogspot.com/2007/07/working-with-cash-budget.html

To take away financial stress you have to be in control. Otherwise your money management is like a giant wave that keeps knocking you down every time you try to stand up. Removing financial stress will allow you to concentrate on more important things, like building quality family relationships and having a more peaceful, simplified family life.

Let me know how you are going via email or comments. If you have any helpful hints on how you reduce financial stress in your family, please let us all know.

1 comment:

abundantly said...

Great post. This is pretty much how I work our bill paying too. I keep a list of these expected bill expenses in the front of our finances book so I can update each one as they come in. This way I can easily show increases to be allowed for in our fortnightly "bills" allocation.