For a lot of people, the transition from being an unemployed student to productive wage-earner starts with a simple list of financial responsibilities. We don’t all hit the ground running in terms of financial independence. Some young employees may still be living in their parents’ house, for example. They don’t have to worry about paying rent or other aspects of household upkeep. But when they eventually move out and buy their first car and house, staying on top of utility bills, one-off emergency expenses, and car and home loans each month will present a complex new challenge.
Here are some tips to help you pay those monthly bills without fail.
Make it effortless
Any big challenge can be made less intimidating if you can break it down and make it easier to manage. Good financial skills and habits take time to practice until they become second nature. Until then, the first step to ensure timely bill payments is to make things effortless. One tried-and-tested strategy for doing so is to link bills to a credit card. You’ll streamline the process by not having to worry constantly about due dates and amounts while being able to track bill expenses in a single place, earn rewards, and probably become more frugal along the way to operate within your card limit. Alternatively, you can automate bill payments to be transferred out of your paycheck each month. This practice allows you to focus on ensuring you have sufficient funds each month without worrying about the details of each bill.
Get more organized
Automated payments are convenient, but in the long haul, there’s no real substitute for becoming organized and having full mastery over your finances. Being detail-oriented and micro-managing your expenses takes time and practice, so you can use digital tools to help establish this habit. A basic spreadsheet lets you track not only bills but all sorts of household expenses, as well. You can add as much detail as you need and input changes on the go. Using an app like Mint adds even more layers of functionality with a user-friendly interface. You can micro-manage your household budget while linking various accounts to provide an overview of your financial health.
Manage the surplus
Hopefully, once you’ve settled into using the right tools and practicing detailed financial management, you’ll never miss a monthly bill payment. On top of that, you’d find a little extra each month to work with. The next step is to manage that surplus wisely. Do you choose to reward yourself with a personal indulgence, such as a bit of shopping or a weekend out of town? Or are you going to set aside some of that excess cash to a savings account or emergency fund? If you still have outstanding debts to settle, you may want to try tactics such as “snowballing” (settling the smallest accounts first to benefit from a positive sense of accomplishment) or “avalanching” (settling the highest interest rate accounts first to minimize overall expenses). These methods will help you prioritize which debts to pay off using surplus income.
For many young people today, years of going through the education system don’t fully prepare them for a full load of financial responsibilities. Commit to paying your monthly bills on time, and use these tips to create sound habits that will set you up with a solid foundation of managing your finances.