Nearly every financial adviser stresses the importance of creating a household budget, a practice that helps curtail spending and often prevents expenses from spiraling out of control.
If you’ve already taken this step and continue to struggle with the balancing act between monthly income and expenditures, it can start to feel hopeless. But there’s still hope: another approach to consider is changing the due dates of your bills.
It’s a tactic few people think to implement, but one that can help steady the monthly financial rollercoaster.
“Simply lining up bills with your income allows you to have a lot more control over your finances and where your money is going and when,” said Kyle Whipple, of Michigan-based C. Curtis Financial Group.
All you have to do is call up creditors, utility companies, or any other business in question and request a due date change. Most are willing to work with customers on this issue.
Still not convinced? Here are five ways that taking such action can improve your monthly finances.
1. Spread Big Expenses throughout the Month
Having multiple major bills (like mortgage or rent, car payments, daycare costs, and utilities) due at the same time of the month can translate into a serious cash flow problem.
Rather than be tapped out by paying several hefty bills all around the same time, try shifting the due dates for one or two bills to later in the month, after you’ve received another paycheck or two.
“Sometimes pushing one of those bills to the other part of the month allows you to have more cash flow on both sides of the month,” said Whipple.
2. Clarify Exactly How Much Free Cash You Have
Some people spend blindly—and when bills come due have little money left to pay them. To avoid such a scenario, arrange to have your bills due as close as possible to your payday. This also helps make it clear exactly how much free cash you’ll have to use for other things throughout the month.
“Lining up bills with your payday allows you to get that money out of your bank account as soon as possible, so you know how much money you have left for the rest of the month,” said Whipple.
In addition, rearranging your bills this way, especially when you’re living on a tight budget, ensures that the bills are a top priority, says Dawn-Marie Joseph, founder of Estate Planning & Preservation.
“The closer you can pay the bill to when you receive your paycheck, the better chance the bill will get paid,” said Joseph. “It’s just great discipline for yourself.”
3. Avoid Late Fees, Excessive Interest, and Lower Credit Scores
A 2017 study from the National Foundation for Credit Counseling reported that about one in five people (22%) do not pay their bills on time. And it’s no secret that paying a bill past its due date often involves a penalty in one form or another—whether it’s a late payment fee, an increased interest rate, or a lowered credit score. (You can check your credit score for free on Credit.com.)
“When people miss a bill, over time those overage charges or the interest adds up,” said Whipple. “Between that and overdraft fees on your bank account when you don’t have enough money there to cover a bill payment, it can be dangerous.”
Adjusting your bill due dates so that you know exactly when they’re due can help avoid overlooked payments or payments missed due to a lack of sufficient funds.
4. Eliminate Uncertainty about Monthly Due Dates
According to Whipple, most people pay bills when they get a notice that the due date is approaching and have no clue what the actual due dates are each month.
Requesting a specific date that you have decided upon, such as the first or the 15th of the month, eliminates such uncertainty. This helps you remember your due dates and pay those bills on time.
5. Prevent Unnecessary Credit Card Spending
It’s not unusual to reach for a credit card as a stopgap when living on a limited income or when your cash flow has run dry after paying bills. But it’s not a good long-term approach to balancing your monthly budget.
Rearranging due dates can help spread your bills out or align with paydays so that you have adequate cash flow to get by without relying on credit cards.
“If you’re on a single income or a tight budget, making sure you know when you need to pay bills is huge so that you don’t overspend and end up using a credit card,” said Whipple.
How to Request a Due Date Change
Most companies make it fairly simple to change a bill’s due date, even allowing customers to do it online. Many utility companies even call it out as an option on their websites.
“Most people don’t realize you have leverage to call up and ask to change the date,” said Whipple. “It doesn’t hurt to ask. The worst-case scenario is they say no.”
All that’s left now is to implement these tips and take control over your bill payments. Your wallet will thank you.
Image: Jacob Ammentorp Lund