Master your finances: how to manage bills while saving effectively

Bill management and savings should go hand in hand. Many people prefer one to another at a time. The reasoning behind this is that staying on top of expenses is hard amid the soaring cost of living. On-time bill payments are necessary to avoid the disconnection of utility supplies, high-interest penalties, and late payment fees on unpaid debts. Savings are vital to help tide you over during emergencies.

Low wages are partly to blame for your struggle to strike a balance between savings and bill payments, but that is not the case with every household. Poor money management is the biggest reason people fall into debt. According to a survey, about 39% of people in the UK do not feel confident managing their money, with 11 million with savings of less than £100 and nine million in serious debt.

It is not easy to manage your finances because your financial situation changes rapidly. When cash is tight, many people find it harder to keep up with payments, and if they do not miss a payment, they stop contributing to savings needed for a rainy day. A lack of savings is one of the reasons why people rely on bad credit loans with no credit check.

Ways to manage bills along with savings

When your financial situation is not so good, you will find it a bit harder to get to terms with money management. Fortunately, there are some effective ways to manage bill payments without compromising on your savings:

  • Create a budget

Believe it or not, budgeting is paramount to keep tabs on your expenses. More often than not, you spend more than you should and, as a result, run out of money when you are caught unawares by emergencies.

Various budgeting methods exist. You can choose any one of them because each method tracks your expenses. Make sure you record every tiny expenditure to have a clear picture of how much money you have spent and where.

List out inessential expenses and cut back on them. Use a budgeting app if you cannot handle a spreadsheet. The budgeting app will record all expenses in one place to let you know how much you have spent and how much you retain in your pocket. With a clear picture of your finances, you will be able to have wiggle room in your budget to manage payments while saving money smoothly.

  • Automate savings

You should establish a separate savings account rather than keeping money idle in your wallet at home. Link it to your salary account and use an auto-debit mode so that every month a fixed sum of money is pulled from your pay account. Now, the question is how to decide on the savings amount.

Look over your budget and estimate the average monthly expenses. The rest of the money should be your savings. Find out what proportion of your income it does make, so the next time when you receive your pay, you should immediately set aside that money.

Not only does automation help with building savings, but it also helps with staying on top of your expenses. You should use an auto-debit mode to ensure timely payments. Keep the balance in your account so the payment is not declined. This way, you can avoid defaults, hefty interest penalties and late payment fees.

  • Trim down inessential expenses

Creating a budget and implementing a budget are two different things. There is no point in budgeting, regardless of the budget type, if you cannot cut back on your expenses. The ultimate goal of a budget is to carefully monitor your expenses and see where you are unnecessarily spending.

You should cancel out all subscriptions which are simply waste of money or sound discretionary. For instance, there is no point in signing up for a digital fashion magazine. If you have signed up for a newspaper, ensure you do not receive it in print form. It costs a lot of money. The same news and headlines are available in the digital format.

  • Go to great lengths to save extra pennies

If you are already struggling with debt payments, you should figure out ways to make payments faster. Of course, you will have to cut back on discretionary expenses. The intensity of your efforts depends on the level of debt you owe. If it does not suffice, you should check how you can save money on your regular purchases. Here are some ideas:

  • You should buy groceries from a cheaper supermarket.
  • Make sure you buy seasonal fruits and veggies.
  • Buy non-perishable goods in bulk. They do not go off soon, and a bulk purchase can save you a lot of time.
  • If you are up to your ears in debt, you should prefer cheaper food alternatives.

It is vital to settle your debts sooner rather than later; otherwise, you will have to put up with dire consequences. You may have to downsize as well. Move to a smaller house and use the released equity in the settlement of debt. However, it is possible only when you have a spare room.

If you do not want to move out, you can rent a room. Renting out a parking space or garage is also a nice trick to earn some cash.

  • Avoid the use of credit cards

A credit card is convenient, and you do not need to completely ban it, but make sure that you do not just rely on it. Many people lose track of spending and find themselves running out of money, which results in racking up credit card debt.

A rule of thumb says that you should not use more than 30% of your credit card limit.  Set aside the purchase amount as soon as you swipe your credit card so you do not consider the money spent as money yet to be spent.

Do not use credit cards at all if you are struggling with bill payments. They are recommended only when you are entirely confident about your repaying capacity. Even so, you should not use more than 30% of the balance.

  • Make money from your savings

Savings accounts do not yield high interest rates, so it is not worth letting money be idle in them. You should rather use more creative ways to make money from money. Once you see you have built a significant amount of money in your savings, you should start investing a portion of it. It will help you earn dividends and interest. You can even buy fixed deposits.

They are safer than stock market investments and offer compound interest. However, you will not be able to use that money until it is mature. Make sure your savings account still has some cash in case an emergency crops up.

The final word

You can manage both savings and bill payments together without any problem, but you will have to set up a strategy. The aforementioned tips can be conducive to achieving your goal, but they do not insinuate that you will never need a direct lender loan. Chances are you have to rely on them when savings fall short of cash, and you need money urgently.