Staying on top of bills is a challenge for many Americans. A survey by the Consumer Financial Protection Bureau found that half of respondents have to juggle bills most or all of the time. And an overwhelming majority reported that they have trouble making on-time payments.
The consequences of falling behind on bills can go way beyond late fees. Interest rates on loans and lines of credit can increase when payments are frequently late or missed. Credit scores can take a hit. Utilities and services can be turned off, and assets such as home and vehicles can be lost when the bills aren’t paid regularly.
If you’re among the many Americans struggling to stay on top of bills, there are things you can do to make the process easier. Follow these steps to put an end to the challenge of managing monthly bills.
Step 1: Make a list of all bills due each month
The first step in staying on top of your bills is making sure you know what bills are due each month and when they are due. Review your bank and credit card statements from the past few months to identify all of the bills that you regularly pay.
Make a list of your monthly bills in a spreadsheet, a Word or Google document, or even on a piece of paper—whatever works best for you. Include the name of the lender or service provider, the amount due and the due date. If you make monthly charitable contributions, be sure to include those amounts on your list, too. Also, note how you currently receive and pay your bills—by mail or electronically.
Step 2: Make a list of irregular bills
In addition to your list of monthly bills, make a list of bills that you pay on a quarterly, semi-annual or annual basis. These might include auto or homeowners insurance premiums, life insurance premiums, subscription services and organization membership dues.
Again, include the amount due, due date, and how you receive and pay those bills.
Step 3: Keep incoming bills in one place
Staying on top of your bills also requires keeping track of them as you receive them. If you’re not keeping them in one place, it’s easy for your bills to get lost and go unpaid.
Use a tray on your desk or folder to collect all bills you receive in the mail. Either open them immediately or designate one day each week when you’ll go through all of the bills you’ve received.
If you receive bills by email, create a folder to store those electronic bills and transfer them to the folder as soon as you receive them so they don’t get lost in your inbox. If you receive both paper and electronic bills, you could either print the electronic statements and store them with papers or scan paper bills.
Step 4: Create a budget to manage bills
Managing your cash flow can help ensure that the money is there to pay the bills. Now that you have a list of bills and the amounts due, you can create a budget to ensure that the income you have coming in is enough to cover your bills.
You can use pencil and paper, a spreadsheet or an online worksheet such as the Consumer Financial Protection Bureau’s budget tool to track how much is coming in versus going out. This will help you determine whether you need to lower expenses so you have enough to cover essential bills. It also can help you determine how much you can pay each month for bills that don’t have set amounts, such as credit cards.
[ Read: How to Budget for Retirement ]
Step 5: Move bill due dates
The CFPB survey found that many respondents fall behind on bills because they’re due before they get paid. If that’s the case for you, you might be able to adjust the due dates for your bills. Call your service providers and lenders or check your accounts online to see if there is an option to change when your bills are due. You might be able to align bill payments with your income.
Even if the timing of payment due dates versus income deposits isn’t an issue for you, it might make it easier to stay on top of bills if you can move the due dates to the same day. The CFPB has a worksheet you can use to determine whether changing bill due dates will benefit you.
Step 6: Set payment reminders
Once you’ve identified bill due dates and made any changes to those dates, set reminders so you don’t forget to pay your bills. If you use an online calendar or one on your mobile phone, set up recurring events and alerts of each of your bills. Otherwise, you can mark the dates in a calendar.
Not only will this help ensure that you pay bills on time, but also it will help you ensure there’s enough money in your bank account to cover the bills if you’re reminded of when they are due.
Step 7: Automate bills
The easiest way to stay on top of bills is to set up automatic payments for as many as possible. Usually, the process is simple. You can either log onto your lenders’ and service providers’ websites, create an online account and quickly set up automatic payments from your checking account. Or your bank might offer the option for you to pay your bills automatically.
It’s a secure way to pay bills. In fact, it can be safer than putting checks in the mail because those checks can be stolen, rewritten for a higher amount and fraudulently deposited. It’s a scam called check washing and is all too common.
Using autopay might even save you money because some lenders offer interest-rate deductions for customers who choose this bill payment option. Plus, you’ll avoid late payment fees because your bills will automatically be paid on time.
Step 8: Don’t set and forget
If you’re worried about your account being overdrawn when bills are paid automatically, taking Steps 5 and 6 should help ensure there’s enough money in your account when the bills are due.
Just make sure you don’t set and forget automatic payments. Check your accounts regularly to make sure there aren’t any billing mistakes or changes in the amounts you owe. You also could use an account monitoring service such as Carefull, which will notify you of late and missed payment, duplicate payments, changes in bill amounts and insufficient funds to cover scheduled bills.
And if there are bills you can’t pay automatically, the best way to stay on top of them is to pay them as soon as you receive them. If the timing of income deposits makes that impossible, set payment reminders for those bills so they’re not forgotten.
[ Keep Reading: How to Automate Your Finances ]