5 Reasons Bill Paying Software Helps Your Budget
Utility bills, cell phone bills, medical bills, credit card bills -- the bills just keep on coming, and getting them paid and off your desk is a never-ending battle. The threat of late fees and friendly reminder calls from your creditors adds some time stress to the monthly bill-paying hassle, and it might often occur to you that "there has to be a better way." In fact, bill-paying software has been around since the 1990s to automate the process. It also makes budgeting easier and saves on those troublesome fees and expenses. The convenience angle may be obvious, but making the switch to online bill-paying autopilot can also do your finances some good.
Many accounts, such as revolving credit card accounts, set only a minimum payment and allow you to pay as much as you want, up to the full balance. It's a common mistake, however, to wait until the day you write out the check to decide how much you're going to pay. An impulsively generous payment can mess with a carefully planned monthly budget and cause a problem later in the month when a car repair or other emergency brings a financial surprise. Automating payments, along with a budget, places a check on any snap decisions. Sheri Stuart, education manager of Springboard, a nonprofit financial consulting agency, describes the ideal approach: "Set up a spending plan and think about how you're going to spend money before you get your paycheck. We always recommend the use of bill-paying software."
When you automate bill payments, you set the date and the amount of the payment well ahead of time -- with some products, as much as a year in advance. That means your checks are no longer at the mercy of the post office; you no longer need to worry about the steep late fees charged if the payment arrives a mere minute, or later, past the due date. Many software packages guarantee on-time and accurate payments, and refund the customer if they can't deliver as promised. This makes budgeting easier, since late fees don't have to be paid out of funds intended for other purposes.
Bill-paying software can also ease the heavy paperwork burden that looms overhead right around April 15. Instead of rooting through desks and folders to dig up receipts for deductions, such as medical and educational expenses, the software adds up and categorizes your payments for the entire year. This replaces endless calculator drudgery with quick point-and-clicks; the number goes right on the tax form if you've also linked tax-preparation software.
Money on Autopilot
Automating your financial affairs means setting a fixed date each month for all bill paying. If your payment due dates vary, you can arrange to change them with your providers and creditors. Bill-paying software or an online bill-paying service makes this arrangement easier, with the basic advantage being more consistent money management, a better savings rate and easier budgeting. Springboard's Stuart adds, "We support any tool that helps you stay on track -- but keep online security in mind and your passwords safe."
Bells and Whistles
There's more than one way to pay a bill, and there's also more than a few ways to mess up a budget. Fortunately, inventive bill-paying software features can protect you from unfortunate financial mistakes. The software may alert you when a payment will overdraw a bank account and give you the option to revise the amount or payment date. You can set spending alerts should the outgo reach your monthly budgetary limits, and get a friendly notification if a bill amount seems to be out of line or just plain wrong. Of course, bill-paying software keeps records of everything, and you can print out a summary of your spending at any time for a regular review -- a very good habit when planning a budget.