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Financial literacy · a life skill

Advanced Bill Calendars

the year's bills, paid for monthly

The monthly bills are the easy part. It's the others that hurt: car insurance in March, the service in June, presents in December. Each one lands in a month that was already spoken for. Add up a year of them, pay a twelfth into a separate bills pot every payday, and give the pot enough to start with that it never runs dry. Then a big bill is just the pot doing its job.

  • Challenging
  • Life-Changing impact
  • Learn it: 30 days
  • One standing order
£175 a month, every bill covered
Sam's bills pot through a year: what is in it at each month's end, and the bills paid from it Sam puts £423 in the pot in January and then £175 every month. Bills of £2,100 come out over the year, the largest £540 for car insurance in March. In March the pot touches £0 and never goes below it. It is highest in November, at £668, and ends December back at £423. SAM'S BILLS POT, MONTH BY MONTH · AN EXAMPLE Above the line, the pot: £423 to start, then £175 a month. In March, after the car insurance, it touches £0. J F M A M J J A S O N D £0 Below the line, the bills it pays: £2,100 of them in the year. January to December

A fictional year: seven bills that don't come monthly, from £60 of subscriptions to £540 of car insurance. £2,100 ÷ 12 = £175 a month. The £423 start is the deepest the pot would otherwise go, and it's back at £423 by the end of the year.

The method

Turn twelve surprises into one transfer.

  1. List every bill that isn't monthly

    Go through twelve months of statements. Insurance, water, the car, licences, subscriptions, the dentist, birthdays and December. If it came once, it'll come again.

  2. Add them up and divide by twelve

    That's the monthly transfer. Round it up, not down, so the pot gains a little each year instead of losing it.

  3. Work out the buffer

    A heavy month early in the year can come before the pot has had time to fill. The buffer is the deepest it would go, and what it needs on day one.

  4. Give it its own account

    A separate account, and a standing order on payday for the transfer. Money that's out of the everyday account isn't there to spend.

  5. Pay from it, re-price each year

    Each big bill comes out of the pot. When one renews at a new price, change the list and the transfer once.

    List, divide by twelve, find the buffer, set the standing order, pay from the pot.

Example: Sam's car insurance used to arrive in March and wreck the month. Their seven bills that aren't monthly add up to £2,100 a year, so £175 goes into a bills account each payday. They started it in January with £423, enough to get through March. Now March is an ordinary month.

The bills pot

List the bills that aren't monthly, see what the pot needs.

1 · The pot

No pot yet? Leave it at 0. The plan counts this month's transfer and this month's bills as still to come.

2 · The bills that aren't monthly

No bills yet. Add the first one below, or show an example.

Monthly bills stay where they are. To line those up with payday, use the payday map.

3 · The next twelve months

The pot at the end of each month

4 · Next from the pot

The bills you add show here, month by month.

5 · Set it up

Open a separate account for the pot, with no card attached if you can. Set a standing order for the transfer on the day after payday. When a bill renews at a new price, change it here and change the standing order to match.

Your pot and bills are kept only in this browser. Nothing is sent anywhere.

The research behind it

A reminder moves money. It doesn't make it.

Paolina Medina ran a field experiment with a financial management platform in Brazil. Some users were sent reminders before a credit card payment was due. The reminders did what they were meant to: late-payment fees on the card fell by 14%.

They also did something nobody wanted. Overdraft fees on the same users' current accounts went up by 9%. The rise was concentrated among people who had overdrawn before, and for them the reminders made things worse overall: their total fees rose 5%. Everyone else saved 15%.

The paper's lesson is about nudges: they can have side effects, and one size may not fit all. Ours, for this page, is narrower. Being reminded of a bill doesn't put money aside for it. If the money has to come from an account that's already thin, paying on time just moves the shortfall somewhere else. A pot that has been filling all year is what lets the reminder land safely. That step is ours, not the study's.

What the payment reminders did to fees: card late-payment fees fell 14%, overdraft fees rose 9%. WHAT THE REMINDERS DID TO FEES Card late-payment fees −14% Overdraft fees +9% −15% −10% −5% 0% +5% +10%
Medina (2021), from the paper's abstract. The card got paid on time more often. The money for it came from somewhere.
Change in total fees with the reminders: up 5% for users with a history of overdrafts, down 15% for everyone else. CHANGE IN TOTAL FEES Users who had overdrawn before +5% Everyone else −15% −15% −10% −5% 0% +5% +10%
Medina (2021). The same reminder helped most people and hurt the ones already running close to empty.

The idea

Why it works.

A bill that comes once a year isn't a surprise, but it's treated like one, because the month it lands in has no room for it. Spread over twelve months, the same bill is a small, dull transfer that nobody notices.

The buffer is the part most plans skip. Dividing by twelve gets the year right on average, but a big bill in February comes before the pot has had time to fill. Starting with the deepest point already covered means the pot never asks the everyday account for help.

When it goes wrong

Habits that help.

  • No buffer to hand. Pay in more for the first year instead. The planner shows how much a month gets you through.
  • Borrowing from the pot. If you take from it for something else, put it back before the next big bill, not after.
  • Prices creep. Insurance and subscriptions rise at renewal. Change the amount here when the letter comes, and the transfer with it.
  • The forgotten ones. The pot's first year usually finds a bill you missed. Add it when it turns up, and the next year is right.

Go deeper

Keep going.

Resources

Practise this in HourLife.

In Finances: Subscription calendar. Log your money once a month, set a monthly budget and track spending by category, and keep every subscription and its charges in one list.

Download on the App Store Download on the Mac App Store How Finances works in HourLife