At first glance at the topic of this post, you may well be asking if I have fallen out of my tree!
How could anyone in their wildest imagination ever think that receiving bills in the mail was enjoyable, except of course if you had no friends at all and think your local council, or body corporate manager, or electricity company are the only people who care about you enough to write you a letter.
But, in saying that, let me share a personal experience.
Like many of you, I receive all manner of bills that happen to be a part of living in a modern society. The bills come at varying intervals, with the big ones; things like rates, electricity, and body corporate levies appearing with boring monotony every three months, and house and car insurance generally once each year.
We have often spoken about the benefits of budgeting and putting money aside to cover the recurring expenses.
You know how it works…part of our salary or other regular income is diligently set aside each payday but then an unexpected expense or an opportunity arises, and the money is spent. We convince ourselves that this is OK – we will make it up later! However, later never comes and when the bill arrives, the money to pay it is no more. Sound familiar?
Like you, I am inflicted with the regular ‘love letters’ from utility companies, council, insurance companies and the like. And like many readers, I have worked out a budget and try to stick to it – with mixed success.
But somehow when the council rates notice for $1,500 arrives, the money doesn’t seem to be where I left it! Sure, the council and most other service providers send out their bills a couple of weeks ahead of the due date. So, we madly save up out of our pay for the next pay or two, enduring a couple of weeks of enforced poverty so we can pay the bill on time, or at least only a few days late, thereby hopefully avoiding the loss of the discount for paying on time or incurring a late payment penalty.
If life is so difficult, why then do I love receiving bills in the mail?
About 12 months ago I decided that I was tired of receiving some pretty hefty bills on a regular basis so I resolved to do something about it. No, I didn’t cut out using air conditioning in a humid Queensland summer, but what I did was this:
My personal budget has been worked out on a monthly basis to coincide with when my salary is paid. Like many people, I kept back sufficient funds to cover the expenses as they would come up but, being human, sometimes I would find myself being short when the bills actually arrived.
As I was technically putting money aside to cover these large periodic expenses, why not simply ‘pay the bills forward’ and remove the temptation to spend on other things.
So, I set about working out the monthly amount that needed to be set aside for rates, body corporate levies, electricity, health insurance, and the like and then set up periodic BPay transfers for each of these costs, to coincide with my pay coming in. As a result, each bill is paid by fortnightly or monthly instalments ahead of time.
The sense of relief I have experienced cannot be underestimated. Now, when a bill arrives in my physical or virtual mailbox, I can’t wait to open it.
In almost every instance, the bill is showing a credit balance, or if not, there is only a very small debit balance that can be easily covered with ‘petty cash’. Given the seasonality of some bills, and particularly electricity, my last bill from the power company showed a very comfortable credit balance – more than adequate to cover three months of power consumption and air conditioning for a hot and humid summer.
This system will require a little tinkering to get the balance just right. After I get my next electricity bill, I might reduce the periodic BPay transfer amount a little to be more in sync with my actual expenses. It offers freedom. Amending a periodic transfer online is infinitely simpler than setting up direct debit arrangements
If you find managing recurring expenses to be difficult, and it causes you undue stress, give this a go. Even if only for one or two of your larger bills to start with.
If you have thoughts on this or other tips for managing the household budget, we would love to hear from you. Please provide feedback in the ‘comments’ box.