When you receive your first utility bill—it can be a shock. Realistically you knew they were coming but did they have to arrive in your mailbox the same week? How can you be expected to find $700 within 10 days? If this sounds familiar you should consider bill smoothing.
What is bill smoothing?
Bill smoothing is the idea that you pay your bills via regular weekly or fortnightly payments so that you are not hit with a huge bill at the end of the billing cycle. The idea is that you work out your average usage for each utility and pay a weekly or fortnightly installment to the company before your bill is due. Hopefully you will cover most of the bill before it hits your letterbox or even build up credit.
Why should I pay the utility company early?
Most utilities are billed on monthly, bi-monthly or quarterly but most people are paid weekly or fortnightly. If you don’t put away money in a separate account that you use for bills you will find that you don’t have the money to cover your bills when they are due. Lets face it how many of us have the will power to not touch bill money when you need to go out or eat. If you pay the money directly to the utility company you can’t be tempted to spend it on something else.
So how do I set up bill smoothing?
If you have internet banking you can probably set it up yourself via BPay each time you are paid. This keeps it within your control so you can cancel the arrangement whenever you want to. Otherwise call your utility companies and ask them to set up a direct debit from your account.
Bill smoothing makes it easy to budget your money because you know exactly how much you need to spend each pay on bills. Even better you will never have to dread opening the mail again.
