How To Manage Your Bills

We’re all busy these days. You may get overwhelmed with day-to-day chores and ignore your bills and bank balances until you suddenly realize that you’re overdrawn or don’t have enough money in your account to pay for an important upcoming expense. At that point, you are stuck with late fees or other unpleasant consequences like a dent in your credit rating.

Money management and tracking apps for smartphones have sprung up to fill the void. Most of these are fine products and relatively easy to use, but if you fail to use them regularly and keep running track of your bills, they can give you a false sense of security.

There is a simple thing you can do to help manage your scattered cash flow, and it is known as bill batching. You already do bill batching, you say — that’s when you put all the bills from three months’ worth of unopened mail in one pile, put your deposit and ATM withdrawal receipts in another pile, and let them fight it out. That may be the case, but we have a slightly more functional and pre-emptive form of this well-known process in mind.

For those who have never come across it before, bill batching is the art of scheduling all of your regular bills to come at certain times to manage your cash flow. Most creditors will do this if you simply ask; they are usually just happy you intend to pay your debts. It may take a month of adjustment as a partial monthly charge is incorporated into another bill or an extra, smaller, amount is sent to cover the transition period, but after the transition, you can enjoy the stability and predictability of a regular payment schedule.

When is the best time to gather the bills? That is up to you, but it probably should depend on when you are paid. Whether it is weekly, biweekly, or monthly, there is some sort of time lag between when the money is issued and the funds are ready for your use. That’s certainly true with depositing checks, and even electronic money transfers are not instantaneous. Generally, you want to have all your bills arrive within a short window after your income deposits are cleared.

If you prefer to spread out your bills to avoid one massive set of payouts, you can group your bills into two sets to make them relatively equivalent. For example, you could make your mortgage payment due around the fifth of the month and your other regular monthly payments due around the twentieth of the month. For most people, that will split the bill increments roughly in half and leave sufficient time for bi-weekly income deposits to clear.

Arrange your bills in whatever pattern you want. The main thing is that you arrange them in a fashion that will make it easier for you to remember them and to pay them.

The nice thing about bill batching is that it is useful whether you use automated systems and money management apps or use old-school paper bills and checks. The whole point is to gather the amounts into one relatively short convenient window so that you are not caught by surprise with bills you forgot about. This system is more about time management than about money management.

Eventually, the billing and income cycles will become routine and second nature. You will not miss important payments again, and it is not because of some fancy automated system and mobile app — you owe it all to some pre-emptive planning and telephone calls. Score one for the old school methods.

Originally published at