How to stagger your bills
Quick insights
- Staggered payments may help distribute your bills over the course of the month and improve cash flow management.
- Prioritizing essential expenses (such as housing, heat and food) is important to maintain within your budget each month.
- Credit-related payments have less impact on daily routines but are still critical to consider and plan for.
Having all your bills due at the same time of the month can be stressful, especially if you’re operating on a tight budget. For some people, paying all bills at once may strain finances and limit cash availability until the next paycheck. Without careful planning, this cycle might result in late payments, additional fees and debt.
One possible solution is to space bill payments out over the course of the month, a strategy sometimes referred to as “staggered payments.” In this article, we’ll discuss how to stagger your bill payments, what bills to pay first when money is tight and how to prioritize debt payoff under the circumstances.
What are staggered payments?
Staggering payments is a method of arranging your financial obligations so that they occur at different times throughout the month. For those paid weekly or bi-monthly, staggering your bills means timing your expenses with your income. While this approach won’t lower any monthly bills, it may help smooth out your cash flow, reduce stress throughout the month or help you avoid missing payments.
Practical steps to set up staggered payments
Interested in staggering your bills? Start by re-familiarizing yourself with the current timing of your income and expenses, then work with creditors to adjust due dates on your bills.
Step 1: Detail your monthly income and recurring expenses
Before you can make a change, look carefully at your existing income payment schedule. Record transactions from recent bank statements (the last 2-3 months) on a calendar to track payment patterns. Using your bank statements, mark days that you were paid and the days you made a bill payment.
Step 2: Create your ideal payment schedule
Using the same calendar, look ahead to the next month and carry forward your paydays. These represent the days you’re likely to have money coming in, and therefore key spots to consider for bill payments. Once your paydays are marked, you can try arranging your ideal bill payments. You may want to delay payments 1-2 business days after paydays to help allow time for your paycheck to come through.
Step 3: Negotiate with creditors to adjust dates
Once you determine your preferred due dates, begin contacting each creditor or payee and request to adjust the payment date. Explain that you are trying to align your due dates with your paycheck schedule to help you make timely payments. Be prepared to adapt your schedule since some creditors may have restrictions on available payment dates.
Bonus step: Set up automatic payments
Even with a payment schedule better aligned with your paychecks, setting up automatic payments can be useful. Automating the process can help ensure your bill is paid on time with minimal effort. As a result, you may feel more confident that cash will be in your account at the exact date of your bill.
What bills to pay first when money is tight
When the pressure’s on, it can be difficult to decide which bill needs to be paid first. In general, bills which have the most severe consequences of non-payment should be paid first, beginning with costs related to your basic needs.
- Basic needs: Shelter, water, heat and food are costs which directly relate to your ability to function in daily life. For some people, housing costs may be the most important (and largest) recurring expenses that need paying. They’re typically due on the first of the month.
- Transportation: After paying for the basics, you may want to focus on transportation costs including car payments, gas, vehicle repairs or transit fare. If you don’t work from home or live within walking distance, you’ll likely need to use some form of transportation to get to work.
- Credit-related payments: Once costs associated with living and working have been covered, bills related to credit cards or loan payments can be addressed. While missing payments to these types of creditors can come with financial consequences, missed payments are less likely to jeopardize your basic needs.
How to prioritize debt payoff
While credit-related payments are generally lower priorities than basic needs, reducing debt is still important to address in a monthly budget. Regardless of how you stagger bills, you may be able to lower certain expenses and prioritize debt payoff. Fixed expenses, such as rent, are more difficult to cut down without a major change. Other costs, like electricity or groceries, are based on your usage, which may be adjusted to save money for debt repayment.
In conclusion
Staggering payments is just one strategy you can try to help smooth out your cash flow during the month and reduce financial stress. If you’re working to make positive changes in your finances through careful planning, you may also want to research zero-based budgeting or creating a budget spreadsheet. By educating yourself and maintaining focus on your financial goals, you can put yourself onto good footing for the future.
