I don't know many people who love to pay bills. Collecting bills, writing checks, licking envelops and hunting stamps is not one of my favorite rituals. Yet, it is an important part of adult life and we do it every month.
Over the years I have been using the GTD methodology, I have naturally incorporated bill paying into my system. After all, it is a task that needs to be done. Here are a few tips that may help you in your quest to tame the money tiger.
- Know what you have. If you don't know the balance of your bank accounts, it will slip away magically into someone else's pocket. This has always mystified me. If I know within a few dollars what is available, it stays put. If I lose track, the whole amount is gone next time I look. I have gotten into the habit of mentally keeping the numbers in my head.
- Use a tracking system. There are many out there and one should fit your style. If not, make your style fit one of the tools. I used Quicken for years because their Savings Goals helped me have 'sub accounts' for each line item on my budget. It was cumbersome, but it worked. I could save ahead for periodic bills, like property taxes, Christmas and vacations, while having money set aside for monthly expenses, such as electricity, gas and food. Early this year I switched to Mvelopes because it is an online, envelope based system. I miss some features, like tracking investments, but the control my wife and I have obtained is worth it. Since we are living in two cities for awhile, having this information online has been helpful. We both know where the money is at all times.
- Know what bills come and when to expect them. I have used checklists for this task. Why worry about what bills should be coming? Well, planning is one, but the more important part is knowing when the system breaks down. When I didn't receive the electric bill one month, I didn't notice it. It didn't show up the next month either and I didn't think much of it. When the power turned off, I noticed! I still don't know why the bills didn't come, but that didn't release me from my responsibility to pay the bill. Now I track it myself.
- Have a budget. A budget is a living document, expanding and contracting with life. It is there to assist in decisions. To make one, start tracking every penny spent for a month. Write it down and compile it. It is an eye opening experience. Sit down with those who spend the money (ie spouse) and discuss it. Don't accuse, rationalize or fight. As Rafiki in The Lion King said, "Doesn't matter. It's in the past." What is important it to learn from the past and plan for the future. Make it a monthly exercise to look at how things went last month and suggest changes for the coming month. Decide together what are reasonable amounts to be spent. Try to stick to it. Make a reward system, if it helps. Above all, don't beat anyone up over a mistake. It happens. Rome wasn't built in a day and budgets aren't golden overnight. It takes time to build financial discipline. Note the situation, the thoughts behind it, decide what the correct response should be in the future and move on.
- Post a graph. I have used this at work. By posting the budget vs. actual spending on a wall, everyone takes notice without having to say a word. I have watched my team correct many bad behaviors without my lifting a finger or threatening to fire anyone. Show the goal and progress made and most people will subconsciously make the necessary changes.
- Learn, learn, learn. Raise your financial IQ. There are many great sources of knowledge. Books such as Your Money Or Your Life or Total Money Makeover are a good place to start. I read a money related blog, Get Rich Slowly, daily for new ideas.
- Most importantly, talk about money with your spouse and family. Don't let money become a wedge in your relationships. My wife and I meet twice a month on finances. We go over the budget, pay bills, discuss plans for the future and figure out what changes need to be made. Over time we have become in tune with each other's strengths and weaknesses and help each other rather than attack. Because of this financial honesty in our relationship, we have been able to weather financial storms that could have capsized our marriage. We have come closer together through these difficult times.Start now before the clouds are on the horizon.
- Teach your children early. We have shared the budget with the kids and involved them in some decisions. We have helped them plan vacations. It is not the easiest task and we haven't been as successful as we would like. Kids have to learn on their own sometimes and the right wake-up call will happen at the right time. Just be ready with advice when they want it.