When life gets busy, even important financial obligations can fall to the wayside. You may forget when payments are due or lose statements in the shuffle of other mail.
Falling behind, however, can have serious ramifications, including penalty fees, service shut-offs, and credit damage.
Fixing personal finance problems is a common goal. A 2023 Allianz study found that 48% of Americans are planning to manage their money better in 2024.
The good news is that you can track payments and bills with some simple strategies.
Get Your Current Financial Data in Order
According to Sandi Papenfuhs, senior vice president of consumer lending for First Tech Federal Credit Union in Beaverton, Oregon, your first move is to know which accounts you have, then create a budget that tracks your income and expenses.
[Read: How to Make a Budget — and Stick to It.]
“It will give you the clearest picture of your financial habits and allow you to make other important decisions about saving, investing, and spending,” Papenfuhs says.
On a sheet of paper or spreadsheet, list each of your monthly and periodic expenses, as well as any bills you know are upcoming. Add them up and subtract the total from your income and savings.
If you discover that you spend more than you earn or have in savings, you may be struggling with on-time payments not because of faulty tracking, but cash flow issues.
Streamline Credit Accounts
If you have multiple credit cards all with different due dates, payment complications can arise. In fact, a 2023 Affirm survey found that 73% of Americans say credit cards make managing finances a challenge.
“For most people, having many accounts creates financial chaos,” says Paul Miller, CPA and owner of Miller & Compan LLP in Queens, New York. “I suggest eliminating excess to make life easier. When you pick a credit card that offers the most benefits and rewards, and the lowest interest rate, you will only have that one payment to worry about.”
You can condense your accounts and payments in a number of ways:
— Consolidate debt. Why make many different payments when you can send just one? Consider a debt consolidation loan that will absorb the accounts that you currently have. When the interest rate is lower than the average rate on the accounts that you have now, you may pay less in interest, too.
— Request a due date adjustment. You may find it easier to have all your accounts due on approximately the same date of every month. Some lenders are flexible with the due dates, so call around and ask.
— Narrow credit usage. A Motley Fool poll found that 26% of Americans have three or more credit cards. While using a variety of cards for different rewards and purposes can be advantageous, it means you’ll have more accounts to track and payments to send. To simplify your system, consider sticking to one or two accounts.
Automate Fixed Payments
Almost all credit unions and banks offer a free system to automatically schedule payments, so take advantage of it.
“Many bills, like rent or a mortgage, cellphone and car payments are due the same day each month and are the same amount each time,” Papenfuhs says.
“These are the easiest to account for and ‘set and forget’ with autopay,” she adds.
For credit cards, set up auto pay with the issuer. You’ll typically have a choice between a minimum payment, fixed amount or to have the entire balance paid in full.
“This eliminates the need to remember and pay bills manually, saves paper and a stamp and ensures you never have a late fee,” Papenfuhs says.
Designate a Fixed Place for Mailed Bills
Bills, for things like taxes and medical care will usually be sent to your home. These can get lost among other correspondence, though.
Make a point of separating paper bills from the rest of the mail immediately. They should all go in a single safe place so you never have to hunt for an envelope that may have slipped behind a dresser or that you mistakenly tossed.
Mark Your Calendar With Due Dates
For accounts that you can’t or don’t want to automate, Papenfuhs suggests adding their due dates to a wall calendar. To offset payment delays, mark them at least a few days earlier than they are actually due. Use big, bright colors so you can’t avoid the reminder.
[Related:Important Dates to Mark on Your Financial Calendar]
Another option is add the accounts to an online scheduling calendar. Google Calendar, for example, will ping you before the bill is due.
Just create a Google account, go to the calendar section, and create an “event” for your recurring bills. Click the “add a reminder” so messages about your upcoming bills go directly to your email or get sent as texts.
Use Apps and Software
“Money management apps today compared to the past are so effective when it comes to keeping track of not only your monthly expenses but the ancillary ones that tend to go under the radar, ” Christian Maldonado, co-founder and chief operating officer of Finsult, an accounting and tax service in Miami, said in an email interview.
Most budgeting apps can help you organize your personal financial affairs, provide real-time information regarding your banking activity and alert you to all the expected payments. Some bill pay apps and software provide more specific payment functions.
[Read: Best Budget Apps.]
Set Electronic Alerts
When you use a bank or credit union’s bill pay system, you can usually set it up so the financial institution alerts you to an upcoming payment with a text or email.
“Electronic alerts are crucial for accounts you may still have balances on, especially credit cards with high interest rates that tend to change overtime,” Maldonado says.
“With these alerts, it can make a huge difference in how much you’d owe in interest alone over just a couple years, hundreds compared to potential thousands in some cases,” he adds.
Make Checking Your Finances a Daily Habit
Keep track of the amount of money you have at any given time, when you get paid next and how much needs to go out for bills by making a brief financial review a daily habit.
“I do this,” Miller says. “Every morning I get a cup of coffee, check my bills, reconcile my bank records and pay my credit cards daily. It makes life so much easier. Many people get anxiety before looking at their bills, so be proactive instead of being reactive.”
Assign an Accountability Coach
If you really struggle with maintaining a good payment history, Maldonado suggests confiding in a trusted individual who can prompt you to make the right decisions. Or, he says, make yourself accountable.
“All of my clients are required to submit a bill list from their personal and business accounts that are paid monthly, and use it almost as their own personal accountability coach,” Maldonado says.
“This bill list is their best friend when it comes to having their expenses come to life on paper, as that’s when bills and obligations become a reality. I even push them to systemize their billing by staying a month ahead and paying all of their bills on the first. This ensures not only payments being on time but gives some room for a possible time where memory causes a missed payment,” he says.
Reward Yourself When You Pay on Time
Changing your ways so you stick to an organized and responsible plan can be a major achievement. If you’ve regularly let bills slide, but now you’re committed to tracking and paying in a better way, reward yourself with something positive. It could be a special coffee drink, yoga class or streamed movie with a small cost.
“Being goal oriented is always great, which means rewarding yourself when you are doing your best,” Miller says.
“Recognize that there is a cost of not paying your bills on time, of not being organized, such as interest added to debt, and bad credit scores. If you never learned how to track and pay your bills, that’s OK. You know now. Slow down, take a deep breath and do it.”
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The Best Way to Keep Track of Payments and Bills originally appeared on usnews.com
