Adults have many responsibilities and it is easy to get overwhelmed with all of the tasks that rest on your shoulders. Sadly, there are some duties that can seem less important than others and it is all too easy to push those items to the bottom of your to-do list. One of the most hated tasks can be paying the monthly bills. It is not only time consuming but it can be difficult and depressing if you don’t have an organized system that lets you accomplish the task. But with all of the financial issues that have troubled consumers over the past few years, it has become more important than ever to keep track of bills to maintain good credit.
Why It’s Important
Having good credit is something that everyone wants but not everyone knows how to go about achieving it or even why it is really important. First, good credit is a way to know that you will be able to get a loan when you want it or need it. It also assures you that you will get that loan at a fair and reasonable interest rate. On a basic home mortgage, a good credit rating can save you about $50 a month over someone with just a slightly lower credit rating. And you might think that $50 is not a lot of money, but think about what that will add up to over the life of the loan. A 30 year mortgage is 360 payments and saving just that fifty bucks each month will add up to total savings of $18,000! That is a huge savings when you look at it as a lump sum. So the first step in building good credit is learning to look at even a small savings as a benefit and worth the time to accomplish.
Nothing is easy to accomplish if you are not organized and keeping track of your finances is certainly no exception. Bills arrive in the mail or via email and it is easy to just throw the paper copies in a corner and scan past the emails. But keeping all of your bills in a single place will make it much easier to find them when you are ready to pay them. This can be making a special drawer for paper copies and a file folder in your email for soft copies. Or maybe you want to print a copy of each bill and put it in the draw so that you have them all in one location. But keeping them in an easy to access place will make the process much faster when it is time to pay bills.
Create a Budget
Nothing is worse than the feeling of knowing that you don’t have the money to pay all of your bills. That is a big reason why people avoid the bill paying task. Out of sight and out of mind is not always true. Not dealing with your financial issues will only make them worse, they never just go away on their own. So over the course of your first month or two of fiscal responsibility, you need to create a list of all of your regular and recurring bills. It can be helpful to start with a printed calendar page and simply enter the bill and the amount on the day that it is due. This will give you a snapshot of what your bills look like for the entire month. Now you can add in the amounts of your income on the appropriate days. Using two different colors makes it easy to distinguish the money coming in and the money going out. Your next step is to determine which bills are going to be paid with which paychecks. If you get paid once a month then it is easy and you can pay bills after you are paid and be pretty much done for the month. But if you have two or four paychecks a month then you will need to work more at budgeting for each check.
Not Everything will Always go According to Plan
Using your budget calendar will help you to always know what bills are coming due and when you will have the money to pay them. But there are times when you will have to cover an unexpected expense. Hopefully you have a small emergency fund to fall back on but if not then you will need to work within your budget to meet that expense. For this reason, it can be very helpful to use a highlighter to mark off your bills as you pay them. It gives you a very easy to read ledger that shows what is paid for the month and what still needs to be paid.
A Note on Emergencies
Living on a tight budget, it might seem impossible to think of beginning a savings plan. But that tight budget is even more reason to have a stash to fall back on. You might have only a very small amount of disposable income every month or you might even need to consider shaving a bit off of your grocery budget but in the end it is worth it. Saving just $5 a week will add up. If you can save more then that’s great but a few dollars cut from a grocery budget or from entertainment can be easily adjusted to in a few weeks. But then when the day comes and you have a flat tire that must be replaced or you miss a day’s work and a day’s pay, then you have a way to stay on budget for the month and not miss paying your bills on time. It will be a huge relief to only have one issue to deal with and not that one issue plus a bill that you can’t pay.
Spend the Time and Invest in Your Financial Future
Getting organized and committing to improving your bill paying habits is all a part of being a responsible adult. No one will improve your credit score for you. But a little bit of time to set up a budget and keep track of bills will reward you with better credit and less stress.