You will never be bill free.
Phone bills, car registration costs, energy bills, water bills and more. It’s a fact of life that you have expenses and if you do what most people do – that is, leaving your bills in a pile at your front door or on your dining room table, you open up the possibility of forgetting to pay.
Yes there is a due date whereby you could hold off paying to better manage your cash flow, but how often do you actually do that successfully? How much money have you saved by holding on to $43.35 for an extra 9 days?
Changing your routine to pay your bills as soon as they arrive, rather than when they are due, can have a significant positive financial impact on your finances. It will save you time, save you money and create a process for what is one of the less fun aspects of managing your personal finances.
Here is why you should pay your bills the moment they arrive:
1. You will likely get a discount for paying on time
Paying your bills as they arrive rather than when they are due can sometimes give you access to great discounts on the goods or service provided. Such as, with education course fees where some providers offer significant discounts if you pay for your course upfront or before the due date – these discounts can be up to 25%!
Many electricity providers offer 2-3% off the bill if you pay before the due date – a saving that can materially add up over the course of many years (which lets face it, will indeed happen as you cannot go without electricity).
To pay annually or monthly?
Consider paying your insurances, such as car insurance, annually rather than opting for monthly instalments and you could save hundreds of dollars each year. Have a look at your new insurance bill sand see the price of the annual payment and then look at your monthly repayment, times the monthly repayment amount by twelve months – notice a difference? Many providers charge significantly more for monthly instalments compared to the annual payment amount.
2. You will never pay late fees or interest charges, which add up
Postponing the payment of your bills until the due date could lead to late fees and unexpected charges. A late fee often seems like a minor expense but when you realise what percentage of the bill it equates to – you quickly learn that a fee of $5 on a $25 phone bill is as good as paying 20% more for the phone plan you hunted down to specifically save money and get a good deal.
In the case of credit cards and mortgages, in which interest is charged on the outstanding balance and calculated daily, you could end up paying significantly more by waiting until the end of the month.
Don’t just look at late fees and interest charges as ‘odds and ends’ charges – over the course of a lifetime it could be the difference between driving a Toyota Yaris and a BMW due to how much money you have wasted.
3. You will ensure your credit rating remains spotless
Paying any bill late, especially personal loans and mortgage repayments – has the ability to put a black mark against your credit rating. These black marks can hang around for years, which put your ability to borrow money in the future at great risk. To avoid the risk of damaging your credit rating or paying additional funds to late fees and interest, why not organise to pay your bills as they arrive or as soon as your next pay cheque comes in?
4. You will feel more organised and in turn be willing to spend your valuable time on more pressing issues
Feeling financially disorganised can cause more stress in your life, with numerous things to remember and process daily you can be forgiven for occasionally forgetting to pay a bill on time. Instead of paying your bills once a month, where you have to hunt around the house or your emails for the bill, paying them all in one sitting and then having a pile to file away. Why not, pay as soon as the bill arrives?
Following all of the above is a no-brainer – you will save money on fees, feel organised, protect your credit rating and likely get a discount – all because you opted to not just chuck the paper bill on the front door counter. Bring back control into your finances – you will thank yourself for it later!