Whether you are living paycheck-to-paycheck, or comfortably well off, being disorganized about your finances can end up costing you a lot of money in the long run. Even being a day late can result in late fees, and even overlimit charges, that can all add up over time. For example, paying your electric bill after the deadline could result in an additional $20 charge. If you pay late six times, that’s an additional $120 that you’re paying on top of your usual electric charges. If you are routinely late on multiple bills, you could be looking at hundreds of dollars in additional charges.
Below are five tips to help you organize your finances, and ultimately save money.
1. Organize your mail when it arrives. If you’re like a lot of people, you probably have a stack of mail accumulating somewhere in your house; and you have every intention of sorting through it at your earliest convenience. Unfortunately, it’s easy to accumulate days, and even weeks, of mail that way. When you finally do go through it, you find that some bills are dangerously close to their due dates.
Instead of dropping your mail in a pile, make a concerted effort to open and organize each batch of mail the day it arrives. Separate your bills from the rest of the mail put the payment tickets in the return envelopes with the due dates written on them.
2. Set up a specific place and time to pay your bills. If you have a home office, use that as your designated bill-pay area. Keep your bills in a desk tray, so that you can easily see them. If you don’t have a home office, keep them in another visible location where you won’t easily overlook or forget about them.
Your best option is to pay your bills as they arrive, but that is not always possible. Instead, designate one day and time out of each week for reviewing and paying as many bills as you can. Make the habit of going to your bill-pay area and reviewing your finances, even if you don’t have any bills waiting that week.
3. Pay online. A lot of credit card companies and service providers offer the option to pay your bills directly at the website. The advantage to this is that your payment usually gets immediately posted to your account, even if it takes a few days for them to withdraw the funds from your account.
If you have trouble visiting multiple websites to pay your bills, you can also pay bills online using an app. These services allow you to pay bills from one location, instead of visiting multiple websites. You can make one-time payments or, in some case, schedule recurring payments.
You can also see if your bank offers online bill pay. Bank online bill pay services usually send paper checks to the biller and you can either do one-time payments, or set up recurring payments.
4. Reduce your number of bills. One way to reduce the number of bills you receive is to pay some of them in advance. For example, if you normally pay your car insurance monthly, you can eliminate that bill by paying whatever remains of your balance all at once. It will also save you money because some companies charge a little more for you to pay in installments than if you had paid in one lump sum.
The same goes for your credit cards and any other “finite” bills – bills that will stop arriving if once you pay a certain amount. The more you can pay off in advance, the fewer bills you will receive in the long run, and that’s less that you have to keep track of each month.
5. Log all of your bill payments. Whether you pay online, on-site, or by mail, always throw away the bill and make a note of when that payment was made. That way, you don’t run the risk of ignoring a bill because you thought you had already paid it, or overpaying because you mistakenly believe that you haven’t.
Organizing your bills and avoiding late fees doesn’t have to be difficult or stress-inducing. In fact, once you get a good handle on it, it could even be enjoyable.
Do you have any tips to add to organize your finances?