Bills. Love them or hate them (who on earth could love receiving bills?!) – they’ve got to be paid! Bills are that awful disclaimer to growing up that our parents never alerted us to, and while they are most likely the bane of everyone’s existence, if managed correctly & smartly, bills can be less of a nightmare. Once you’ve found a job after college and have somewhat stabilized in your said job or career, it’s important to establish a rhythm of sorts in regards to your expenditure to ensure you attain a decent credit score, have a certain level of cashflow once you’ve paid everything that contributes towards your livelihood and most importantly, to avoid falling in arrears!
Below, I’ve jotted down a few ways of managing your monthly finances which have seemed to work best for me. Of course we all have different priorities and assets, and not all the principles below may be relevant to you…
First up, your 5 ‘must have’ debit orders
It seems strange to say that one “must have” the following debit orders – no one enjoys receiving those dreaded text message notifications! The truth is, setting up debit orders for some of your most pivotal expenses is one of the safest methods of ensuring that your bills are paid on time. When setting up a debit order, make sure you select a date closest to the date in which your monthly salary is received. Make sure you have a debit order for your:
- Home Loan installment/Rent & Car – since your place of dwelling is such a pivotal human need, it goes without saying that it deserves first priority when paying off all your bills end of the month. Missing a repayment on your home or a month’s rent has some sever consequences which you would do best to avoid! Your car should come next as although it is not necessarily regarded as an asset – it is the tool that ensures you get to your place of employment (and therefore, ensuring your pay cheque) and being able to get from A to B is what could make the difference between attending a network function that opens a myriad of opportunities for you!
- Savings and Investments – saving your money is an absolute must and the importance of saving simply cannot be emphasized enough! It’s really easy to let saving fall to the way side as the reality is that every month something will come up that will need you to spend money on, resulting on skimping on your savings & investments for the month. Make sure you open up an account separate to your usual day-to-day account and ask your Banker to set up a debit order with an amount that is deposited into this account. Endeavour to save 10% of your income. However, if this is not possible, saving an amount of as little as R200 is better than nothing. Bonus points if you set up an account that is difficult to access!
- Retirement Annuity – there is no time better than in your 20’s to save towards your retirement! Thanks to something called compound interest, being young in this regard is to your utmost advantage. Set up time with a reputable financial advisor to set up a debit order best suited to your needs.
- Your Big Spoil – Rewarding yourself is of utmost importance! Whether you plan on travelling to some exotic location during the year, purchasing a new car or whatever else your heart desires, the only way it will actually happen is through planning. Setting up a debit order or automating a repeat payment to a separate account that will house your travel or car fund is a smart way of making sure that you reward yourself for all your hard work.
Where it is not possible to set these payments above as debit orders, other options are to make the recipient’s bank account details as Beneficiaries on your internet banking or to set them up as Repeat payments on your banking app.
Not for clothing – but for your other basic need, food! It is important that you shop for your groceries soon after your pay day. This way you will be less likely to spend money on buying take-aways for lunch on a daily basis, and thus save money! Those little purchases of R20 or R30 a day spent on food? They add up!
3. Reward Programmes
It may sound strange – but bundling up your purchases and making use of great reward programmes is a great way to manage your bills. Examples of these are Clicks Club Cards, Discovery Vitality, Momentum Multiply, Liberty Own Your Life Rewards, Standard Bank UCount Rewards and FNB e–bucks. A personal example of mine is the Liberty Life Own Your Life Programme which has the benefit of providing incredibly low gym rates (I pay R80 for national membership at Planet Fitness), free parking at certain shopping centres (that way, all those R8 coins that I would have to use to pay for parking aren’t a factor – another saving mechanism) and best of all it is one debit order that goes off every month instead of paying much higher gym fees, paying parking at the mall and paying full price for other purchases. Visit the web to have a look at the best reward programme for you. The options are endless!
The scariest piece of advice of all…You know that email your bank sends you every month containing your monthly statement? That’s the most important document of all (for these purposes anyway)! Every 3 months, print your bank account statements for the last 3 months and sit down with three different coloured highlighters. Use one colour to highlight all the payments that count as needs and that contribute to your wealth (mortgage payment, rent, car installment, savings account, RA etc); use another colour to highlight money withdrawn at an ATM and money spent on entertainment. Finally, use the last colour to highlight your remaining debit orders and expenses. If you have too much of the same colour where money has been spent on entertainment, withdrawals and anything else that can be considered frivolous – make a conscious effort to correct this habit! This is an excellent way to see whether your money goals are on track and to eliminate any unnecessary spending
Being grown and independent is incredibly difficult and no one can prepare you enough for its inevitability, but with a few smart steps and a slight change of attitude, you will nail this bills thing in no time!
Founding Editor, The Corporate Canvas