Bills have a nasty habit of arriving all at once, which can wreak havoc with your bank balance. One way to avoid sharp dips in your finances is to pay bills monthly by direct debit. But not all bills can be paid in this way and sometimes paying monthly costs more. Insurance companies, for instance, often charge extra if you pay premiums in instalments rather than as a lump sum. So always check before you fill in the mandate.
Another way to deal with bills is to open a second current account into which you pay a monthly amount to cover all your regular bills. To work out how much to pay - or just to get a view of your outgoings - draw up a table as below.
- Put the months of the year across the top and the bills you want to be covered down the side.
- Estimate how much you spend each month (or quarter or year) on each bill or use old bills for approximate figures.
- Enter the figures against each item on the list under the column for the month(s) in which you make payment.
- Total each column to get the total for each month. Add the totals and divide by 12 to give the monthly amount you need to pay into your bills' account.
If you can use spreadsheet software you will find it quicker than using pen, paper, and a calculator. Once it's set up, you can also use your spreadsheet to find out the impact of any additional commitment on your finances.
