I don’t know how to pay the bills.
This wasn’t a damsel in distress exclamation from a 1950s TV show. This was me a few years ago.
Preparing for a financial worse-case scenario
My husband Bill was leaving for his first business trip since our having two children and buying a house. We are the kind of family that likes to be prepared by preparing for a worse-case scenario. So with Bill, the person in our family who, at that time, was responsible for paying the bills, heading out of town, he wanted to ensure I knew where all the money was, what life insurance policies we had and how to pay the bills. It ensured that, God forbid, he left this world in a plane crash, he left me in good financial health.
Fast forward two decades and we’re getting ready to celebrate our 25th anniversary. Clearly, Bill survived that long-ago business trip, and I survived being tasked with paying the bills. In fact, that discussion so many years ago eventually led to me to realize that having only one person in a relationship paying all the bills was unhealthy. So now we both do it.
Feeling in control of my finances
It was an empowering feeling knowing how much money was coming in and where it was going whenever we had to pay the bills.
Because we had complete control over our money.
To me financial health means having a 360-degree view of your finances. It’s a lot like your physical health. Unless you’re an active participant in keeping your body healthy–through good eating, frequent exercise and regular visits to the doctor for checkups–you can’t feel confident that you’re doing everything you can to remain healthy. With financial health, if you don’t know where your money is coming from and how much you need each month for your budget, there is no way you can be smart about your money. And there’s no way for your finances to remain healthy.
Why paying bills online=good financial health
One of the biggest changes to our financial behavior? We pay all bills online now. Now when a physical bill comes in the mail, that very same day I log into our bill pay system, schedule the money to go out in time for the due date, and hit save. In some instances we get e-bills that go directly to the bank and that are paid automatically.
This increased financial health with regards to paying our bills has had two benefits.
One, we’ve kept more of our money by not incurring late fees and interest charges on our credit cards. We pay them in full each month. We use this extra money to funnel towards retirement, our daughters’ 529 college savings plans and a rainy day emergency fund. And two, because of our habit of paying bills on time, our credit score has soared.
Improve your credit score
In fact, if you’d like to make a half-year resolution to improve your financial health, make a goal to improve your credit score. Clearly you can’t improve your credit score without first knowing what your FICO credit score is. So start by getting that and use it as a benchmark to track your financial health.
It will take a few months for a better credit score to kick in, once you employ these new bill-paying habits. However, I can tell you that it is super satisfying watching your credit score continue to trend upwards over time. Plus, should you ever need to apply for credit in the future–to help pay for college, to buy a car or refinance your mortgage–having an improved credit score should improve your chances of getting optimal financing, including a lower interest rate.
It’s also satisfying feeling fully in control of our finances and knowing that I’ll never again have to utter the phrase, “I don’t know how to pay the bills.”