Understanding and Controlling the Timing of Spending

Welcome back to my budgeting series. At this point in the budgeting process we should have thought about what we spend each month. Today I want to get readers thinking about the timing of their spending and how to get that under control.

Let me tell you a true story to illustrate. I have a coworker who was complaining about bill collectors constantly bothering her. So of course I wanted to help her. Beth was saying that even thought she makes good money she can never seem to pay her bills on time. So to start her budget process I began by asking about bills and when they were due. Beth answered “well I am not really sure when things are due. I just pay bills the day I get my check and then the rest of the money I get to play with.” This comment helped me to understand where her real problem was. Because Beth does not keep track of when her bills are due, besides rent, she does not set aside money to pay the bills in-between pay checks.

For todays discussion, I suggest making sure you know the due date of all your bills. With this information we can compare the due dates to the days we get paid and plan ahead to ensure enough money is available on the due date. An example from my budget is, my rent is due on the 1st of each month. However, lets say I get paid on the 7th and 22nd of each month. The landlord would not be happy to be paid on the 7th of each month so I must set aside money from the 22nd to ensure timely payment.

Paying rent on the first seems obvious but take this and apply it to all your bills. Going back to Beth, if her electric bill was due on the 15th she would wait until the 22nd or later to pay the bill. Not only did she pay late fees each and every time this happened, she gets collection calls, and her credit suffers.

One of the key points of creating and living on a budget is to keep track of when our bills are due compared to when we get paid. To keep track of my budget I like to keep an excel spreadsheet. But if you don’t have that software on your computer, I suggest a notebook. The key columns are Description, Due Date, Budgeted Amount, and Actual Spent. Most expenses have a due day; some like groceries will not.

As always, I change any names used to protect privacy.

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