It doesn’t matter how much income you bring in if you fail to pay your bills. Meeting your financial obligations on time is the foundation of personal finance. Fail to make your payments and say goodbye to your apartment, car, electricity, health insurance, or worst of all – internet. Even though paying bills is an essential part of life, many struggle with it. According to the NFCC’s 2015 Financial Literacy Survey, 24% of U.S. adults don’t consistently pay their bills on time. That’s shockingly high.
Everyone is fully capable of paying all their bills on time. It simply requires a system. And a system requires discipline. I’m going to show you my personal system to track bills. I’m not saying it’s the only system or the best system, but it works. I’ve never missed a payment in my life. You may choose to copy it entirely or it may spark an idea or two to implement into your own system.
3 Keys to Effective Bill Tracking System
1. Organizational Method
The most important key to success is organization. The top excuses for missing payments are forgetting, procrastinating, and being too busy. Staying organized combats all of those and the rules of the system prevent payments from slipping through the cracks.
Back in the day you used to have to physically write checks and mail them to pay your bills (sounds terrible). At that point in time, a bill binder may have been a practical method, but now everything is electronic and accessible online. A popular method today is utilizing a calendar (either physical or online). My main issue with the calendar method is rewriting your list of accounts every month.
The organizational method I prefer is a rolling list organized into a chart. With this method, you list all of your accounts sorted by their due date. This way you simply have a running list of the bills to be paid each month and you just keep working your way down the list. When the month is complete, you jump to the top of the next month.
You can see that my wife and I have a significant amount of accounts because of all our credit cards. There is no way I could remember all of these let alone their due dates off the top of my head. This chart simplifies everything. All I do is enter the amount due, the payment date, and change the color. I’m a very visual person so I love changing the color based on status versus simply checking things off.
Here is my color coding chart so you can make sense of it:
There is flexibility with due dates. Meaning due dates may not always be the same exact date every month depending on the account. I always want the due dates I record to be the front-end of the range to build in an extra cushion. For example, if the due date typically falls between the 6th and the 8th, I’ll put the 6th. If one month it’s the 4th, I’ll change the due date to the 4th and slide it up on my list.
My rolling list method also allows you to see when an account (i.e. credit cards) may need some activity. It’s good to put a little activity on credit cards that haven’t been used for several months. You can see I did this in November with the Chase Hyatt and Barclay Arrival cards as well as 2 more cards in December. The accounts highlighted in light blue are ones that I can pay by credit card for no fee (usually phone, cable/internet, insurance, gym). I always take advantage of this as it helps me accumulate reward points.
2. High Visibility
The best organizational method in the world doesn’t matter if you never see it. Whether you employ the rolling list method or another method like the calendar method you must keep it somewhere that you’re going to see it all the time.
For me, the chart is a single tab in a much larger spreadsheet of all personal finances. It’s something I access almost everyday so I know I’m going to see it. For you, it could be better to print it out and post it on the refrigerator. Or your desk at work. I prefer reducing clutter and going completely paperless. I’ve lost way more papers in my life than files that spontaneously corrupted.
I also prefer Google Sheets over Excel. With Google Sheets, I can access the file from anywhere. Doesn’t matter if I’m at home on my Mac, at home on my PC, on my work computer, or not at a computer at all. I can access the spreadsheet on my phone through the Google Sheets app. Not only can I pull it up but I can also edit it from any of those locations. If you’re not familiar with Google Sheets, it’s Google’s version of Excel and part of Google Drive. So if you have a Gmail account, you have Google Sheets.
3. Two-Step Verification Method
The final key to ensure you never miss a payment is employing a two-step verification process:
1. Schedule Payment
2. Verify Payment Processes
Scheduling is half the battle. My system is to schedule payments one week before the due date. This builds in a nice cushion. Every Sunday I schedule all payments for the rest of the week. Which means I’m scheduling the payments that are due the following week. This builds in even more cushion.
What I’m doing is dummy-proofing my system. Each Sunday I have all payments taken care of that are due in the next two weeks. You can see this in the chart above. All bills in the next two weeks are scheduled either manually or automatically. I know that life always happens and it’s inevitable that I’ll miss a Sunday here or there. Even if I’m 2-3 days late, my payments never are because of the built-in cushion.
Automated vs Manual Payments
If you automate your payments, you want to make sure that you have enough reserves or emergency funds in your account that you won’t bounce something due to timing. Bill due dates stay consistent. The amounts due stay consistent for some accounts but not for others such as credit cards. The majority of people are paid biweekly so the timing is always slightly different each month. With factors that change month-to-month, you want to ensure that you have enough reserves so that unfortunate timing won’t cause an overdraft.
If having enough money is a concern, then it’s better to use manual payments for better control of timing. For instance, you might need to delay that one payment until the actual due date to make sure you got paid first. Also, you should be working your tail off so this isn’t a concern.
The most critical first step on the path to financial freedom is building up an emergency fund. If you’re living paycheck to paycheck, it’s like you’re treading water struggling to keep your head above the surface. If you don’t put yourself on solid ground, eventually you’re going to drown or get eaten. You need to have enough money for the inflows and outflows to cycle through, giving yourself a bank account cushion on top of your timing cushion.
I use both automated (highlighted yellow) and manual (highlighted blue) methods to schedule my payments. But both of these statuses are not final. The other half of the battle is verifying that the scheduled payments actually processed (highlighted green). Even with automatic payments, it’s not 100% safe to set it and forget it.
When I purchased my house, I set automatic payments for my mortgage. A couple months later, my scheduled payment date passed and nothing processed. After a couple more days, I grew concerned and called my mortgage company. I learned they sold my mortgage to another bank and never informed me. Allegedly, they sent the documents to my previous residence. You would think they’d know I just bought a new house! If I wasn’t verifying payments processing, I definitely would’ve missed my mortgage payment that month. And if I really didn’t pay any attention at all, my mortgage could have gone into foreclosure a few more months down the road.
Even manually scheduled payments are not perfect either. I have marked payments as scheduled before that never processed. I think I got distracted and forgot to hit the final submit button for the payment. Good thing I was verifying.
I know that I make mistakes. Companies make mistakes. Websites go down. I created my system to mitigate all these risks. Even when something goes wrong, I know I will still be able to catch the mistake and rectify it before the due date.
Paying your bills on time doesn’t necessarily save you money. But missing payments will most definitely cost you money. When you don’t pay on time, you pay more. So might as well do it right. By never missing a payment, you will improve your credit score, avoid extra fees, keep all services running without interruption, and prevent accounts from entering collections or default.
This system works perfectly for me. The goal is to find the system that works perfectly for you. You might implement everything except the color coding. Maybe you already use Google Calendar and will just add the color coding element to what you already do. Or maybe you will shift your scheduling a week earlier. I hope that there is some actionable element that will improve your personal finances and how you manage them so you never miss a payment ever again.