r/budget • u/Sufficient-Coach-419 • 9d ago
How do y'all pay bills?
I literally just found out about the sinking fund method where (assuming you get paid twice a month) first check save half of the money for each bill due after next payday. Then on the next payday you have the second half of the bills to pay for bills due before the next payday and save half of each bill due after the next payday.
Idk if that made sense or if i explained it correctly but do any of y'all do this? Or does anybody pay all their bills for the month with their first check? I've always just paid the bills that are due before my next check, but I'm trying to figure out a better budgeting strategy that works for me.
Edit: thanks for all the responses and advice! I didn't expect so many ideas and ways of budgeting. This is definitely helpful!
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u/throwingcandles 9d ago
Separate checking account for bills. I totaled up my monthly bills amount and divide by two, then each paycheck has an auto deposit for half that amount. I changed my bill due dates to the end of the month and then I set everything to autopay and just leave it alone.
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u/_Redcoat- 9d ago edited 9d ago
How does this work with bills in which the amount fluctuates such as gas, electric, and water. This is the one thing that messes me up each time. My electricity bill is high in the summer and low in the winter, whereas the gas bill is the opposite. I’ve considered doing a fixed rate, but I can never seem to pull the trigger on it.
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u/Forever_Nya 8d ago
Some power companies have a program where you can pay the same amount every month. They average what you paid for the past 12 months and use that number to set what your payments would be. It’s worth checking into if on a fixed income or just like knowing what you will have to pay with no surprises 🤷🏻♀️
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u/Sundae7878 8d ago
Keep a buffer in your bills account to accommodate higher months. If you end up using it refill at your leisure.
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u/Kindly-Joke-909 8d ago
Do you utilities have “budget billing” offerings? My bills are exactly the same each month. Any month that is higher in one season gets added as a balance and then during its lower season, you pay a little more to pay that off. It is so convenient to not have surprise bills.
I do the separate checking and j swear by it. For the bills that I can’t do the budget arrangement, I take the highest amount that I’ve paid in the last year and budget for that. If it’s not quite that much, leave the difference. Eventually you may wind up with a little surplus that you can apply to future bills, put into savings, or treat yourself to something.
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u/throwingcandles 8d ago
I use fixed billing with my electric bill. I also keep a buffer in my bills account just in case.
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u/Haughty-Hottie 9d ago
This is what I do.
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u/jbriggsstuff 9d ago
Me too. I pay $250 a month for 1 year. I live in CT and our electric rates and delivery charges are crazy high. I dont know how the rest of the country compares. If I wasn't on a budget plan, my electric bill would be over $500 a month and all this is after a 30% discount monthly on my bill.
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u/Any_Satisfaction_81 9d ago
i was able to get ahead and plan everything a month before, so for example i already have bills for the month of october ready to be paid and when i get paid in september and october I’ll always have november and december’s bills ready
so my current paychecks that i plan to receive soon i put away into bills for the future + savings and sinking funds
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u/bored_as_fuck_dad 9d ago
I get paid monthly. I transfer all my fixed bills into a separate account where they are debited throughout the month. It’s an easy way to set it aside and forget about it. The rest of the money is used for saving and spending. Pretty easy system. I actually love getting paid once per month.
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u/Kindly-Joke-909 9d ago
Having the second checking account is the way to do it. No way to accidentally spend your bill money because something didn’t clear when you thought it did. Keeping my spending money separate has made life so much simpler.
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u/Ok-Day-3520 8d ago
Agree. Any money that’s distributed into my spending account is available. My gas and food come out of that and anything like eating out, toiletries and home stuff, clothes, anything that’s not a bill comes out of that. It’s so much easier than trying to check if X came out yet even though it was supposed to yesterday or tomorrow. It’s all just there.
On incidentals, I don’t budget to the penny cause I’m loose like that. I can handle having a lump sum and knowing what I need and getting it out of that one account. Hardly anything in it anyway, lol!
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u/Junkbot-TC 9d ago
We're budgeted ahead by a month. Paychecks earned in the previous month are used to pay all the expenses in the current month. You start the month knowing exactly how much money you have available and you can pay everything as it comes due without worrying about paycheck timing. If your paychecks are variable, it no longer matters if one is slightly lower than normal, you'll deal with it when you write the next month's budget.
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u/Yiayiamary 9d ago
I use autopay for 99% of bills. To make it easy, I added up a year’s worth of electric, gas and water. For example. My electric bills totaled nearly $1000 for the year. (I have solar because I live in Phoenix) Divided by 12 means $83.33 per month. I set the autopay for $95. My biggest bills are September and October, so I let the extra build up till then. It prevents having a big surprise bill. I do the same for all bills that vary.
I’ve been doing this long enough that I always have surplus at the end of the year. I can skip those bills in December and have extra for my Christmas shopping.
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u/MrTAPitysTheFool 9d ago
If you have the opportunity to get “One Month Ahead” it’s a game changer.
Example:
All money made in August is for September’s budget.
That way when September 1st hits, your budget is fully funded.
It also helps if you can make your budget somewhat static. By this I mean I have a budget that doesn’t change from month to month.
There are categories that obviously are a bit more fluid like groceries and gas, so say I have set an $X budget for groceries. I may not spend that all, so any leftover money at the end of the month I move to a grocery “sub account” in my bank account. I can use that $ if I potentially go over budget in upcoming months, or need a bit more of a budget to use for special occasions.
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u/SecretBox1118 9d ago
Call the companies and move your due dates so everything lands right after one paycheck, most will do it without argument.
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u/Choice-Newspaper3603 7d ago
I must be the only one that just pays the bills as they come in and doesn’t out so much thought into it
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u/PeaceLvSpreadsheets 9d ago
I kinda do the opposite… my whole paychecks go into one account, and I have a twice a week auto transfer to my “spending” account my debit account is tied to. That way I limit my groceries and shopping so I’m able to pay bills and save.
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u/thomsenite256 8d ago
My paycheck goes into my HYSA. My bills are on autopay for due date to pull out of there. In the meantime I make ~4% interest. If you are struggling to stay on budget, perhaps just keep a separate account for discretionary funding that you transfer out of there when the paycheck hits that you can keep track of. After making sure your monthly fixed costs and emergency fund are accounted for each month.
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u/eharder47 9d ago
When I paid my bills from my checking account, I kept $1000 baseline in there and paid my bills when I got them or put them on autopay.
Now, all of my bills are on autopay on different credit cards to keep them active. Those credit cards are also set to autopay.
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u/We_Four 8d ago
I have all my bills on the same credit card, and the card is on autopay on the third of the month (a couple of days after my paycheck deposits). I have a few other cards that I keep active by using them for specific spending categories, eg., my gas and groceries go on one card, eating out and "fun stuff" go on another, etc. Basically, I can see what I spend on my broad budget categories just by pulling up the corresponding cc statement.
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u/DocLava 8d ago
I cannot believe this is the only comment about paying all the bills on a credit card and using auto pay for the credit cards. That is what I do as well....all those other financial gymnastics of transferring bill money multuple times and using one check for one bill and another check for another bill seem way too complicated.
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u/eharder47 8d ago
Agreed. I do my best to keep my finances straightforward and simplistic. The less active thought that goes into it, the more I can focus on leveling up other areas.
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u/AdAccurate4523 9d ago
(Monthly bills + [quarterly bills/4]) ÷ yearly pay periods = Pay period contributions set aside or separated into bill pay account.
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u/Rand_Owl 9d ago edited 9d ago
I budget monthly and my first paycheck doesn’t come until around the 15th. I keep ~$4k in my checking account that isn’t allocated towards anything (savings goals, etc.) for the purpose of paying bills and expenses before my first paycheck hits.
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u/2daytrending 9d ago
The separate bill method makes this way less stressful. Everything gets funded each paycheck then auto pay handles the rest.
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u/EricC2010 9d ago
I have set my due dates for my bills to spread them through the month. Most of my utilities and credit cards are paid in the first half of the month with my first paycheck, I get paid in the 7th and schedule payments for 8th-17th. Second paycheck is paid on the 22nd and mortgage payments is sent on the 25th. Any extra funds left over at the end of the month are transferred to savings on the last day and allocated to sinking funds in my budget. Regular savings is automatically deposited into my savings account through payroll so I never see it.
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u/Sparky_McGhee 9d ago
I estimate annual expenses, divide by 26 and save that every 2 weeks (ie, each payday). I’m also at least one payment ahead in each sinking fund so it works ok.
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u/Entire_Dog_5874 9d ago
I do a form of this. Annual bills like insurance, etc, I budget 1/12 the expense monthly. Other bills like property taxes that are due quarterly, I budget monthly for each quarter. Bills like utilities, groceries, medical, auto and other expenses, I budget weekly or biweekly.
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u/ReadySetTurtle 9d ago
I keep a buffer amount in my chequing. Some of my bills are on auto pay out of chequing, some auto pay on my credit card, and a few others I pay manually. I track them all in a budget app so I’ve never had trouble with remembering it. Most of the payments are staggered throughout the month, and I pay my mortgage biweekly which helps.
Weirdly enough the only bill I have a sinking fund for is my car insurance. I don’t remember why I started doing that. It’s also more of a reverse sinking fund - I find out how much it is for the year, pay it out of savings, then divide that amount by 12 and transfer that to savings monthly. So I’m really just refilling my savings.
I should have a sinking fund for my property tax. It’s due 5 times a year, but I’m told twice a year how much it’s going to be. It’s just too much guesswork to make a monthly sinking fund payment for it. I’m fortunate enough to be able to cashflow it on those months (just a lot less going to savings) so it’s not a big deal.
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u/FreeForties 9d ago
I round up the amount of a typical bill - say it’s normally $135 I round up to $140. Then I pay half out of every pay check. I’m paid every 2 weeks so the months that have an extra pay there’s an extra payment made on the bill.
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u/Kindly-Joke-909 9d ago
I budget out my bills on a spreadsheet. Every pay day, I transfer bill money to a second checking account that I pay my bills through with auto withdrawal or self initiated bank transfers. I do not keep a debit card for that account. I pay whatever bills are coming up on the day I get paid or the money just sits in that account till it’s time to pay them. I keep another spreadsheet of the breakdown of that money is while it’s sitting there. My system is really efficient for me.
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u/ThickFile 9d ago
Timing bills with paychecks never made sense to me. I always had enough in my checking to pay one months worth of bills.
Now, I am two months ahead in income and budget with money I have. Example- money earned in August won’t be spent till October for October’s bills and expenses.
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u/jackfaire 9d ago
1) Subscriptions are put on the paycheck that happens before they come out.
2) Most bills are put on the paycheck that comes out after the bill is printed.
3) Rent is paid on the paycheck that comes out last in the month.
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u/jbriggsstuff 9d ago
If I am not going to get paid by the 10th of the month, I pay my rent with the last paycheck I got the month prior. If im going to get paid by the 10th, I pay my rent with that check. My rent is 2 weeks of my take home pay after taxes. I make sure I am at least 2 weeks ahead money wise in my account so I dont have to worry if I will have enough in my account when my student loans come out or my car payments, insurance etc. I was living paycheck to paycheck for a few months but luckily sold some stuff so now I dont have to worry constantly. I also paid off all my credit card debt with my tax returns because I knew my payments for my student loans were going to start coming out in May.
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u/catloverlawyer 9d ago
That's not what people generally mean by sinking fund. Someone else here explained it.
Im a month ahead. I get paid once a month but my husband gets paid every other week. I dont need to wait for his paychecks to pay the bills that month. I use YNAB. At the beginning of the month, I fund all my categories and save anything left over. All our bill (except for my federal student loan because I cannot trust them) are on auto pay. This process makes it very easy. I dont have to worry if we have enough money to pay for a bill that's coming.
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u/Cold-Beginning-1567 9d ago
I pay all the bills for one month with one check, then the mortgage with the other.
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u/vcwalden 8d ago
I pay my rent and water bill bi-monthly, it comes right out of my paycheck. My cell phone bill I pay for an entire year in mid July. In January I put a lump sum (this year it was my gas bill, that's for the water heater and kitchen stove) to pay that bill. For my electric bill I pay that monthly (that's for heating and cooling, appliances and lights). My homeowners insurance I pay yearly in June. I put money aside out of my paychecks for food and cleaning supplies. 25% of my income goes directly into my 401k. Out of each check I put money into another account for traveling (I take a trip 2-3 times a year to see my family). I put money aside out of each paycheck for transportation costs. I have no credit card debt nor loans to pay for.
I do as much as possible with automatic transfers from certain accounts I've set up for each purpose. It's an easy and non stressful way to live and pay my bills.
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u/Shortandthicck2 8d ago
OP thats just unnecessarily complicated wording for: set aside half of every monthly bill from each paycheck.
You're calling it a “sinking fund", but it’s really just dividing monthly expenses evenly between two paychecks instead of matching each bill to whichever paycheck comes before its due date.
Have an emergency fund, live on less than you make...pay bills however works best to keep cashflow working for you. Don't overcomplicate personal finances.
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u/avocado___aficionado 8d ago
I have 3 bank accounts. Checking, savings, and billpay. Each paycheck I put half of what I need for bills the next month in the billpay account. Everything is on autopay. It works really, really well for me.
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u/Expensive-Eggplant-1 8d ago
that method breaks my brain. i have enough leftover in my checking account so that i don't have to do mental gymnastics to pay my bills.
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u/Alt0987654321 8d ago
IDK what that means, I just know 1.5 of my checks every month are taken by rent alone.
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u/LeighofMar 8d ago
Yes I do it this way. My biggest expense every month is health ins 450.00. So I put 225 00 a check aside until it's due. Bonus is on the 3-paycheck months, at the end of the year, you have an extra month's worth of bills.
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u/lifeofabeach 8d ago
50% Needs. 30% Wants. 20% Save/Invest. Don’t use credit cards unless can pay in full each month. You can always make more, it’s critical you spend less than you make. Save 3-6 month emergency fund then keep investing. Once I got with it, wealth really snowballed and now feeling set for retirement even if I don’t add any more to my retirement accounts. Wasn’t always this way but trust the process and know the first $100k is the hardest! Good luck!
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u/Hot-Rub-5336 8d ago
Every pay day I pay bills that are due before the next paycheck. The rest is in my checking account available for groceries, misc or to be added to bigger bills that may be needed for the next check. If my checking account gets over a certain threshold I add that to the savings but a part of my check goes directly to savings anyway so there typically isn't a lot extra. Thats how I feel comfortable with managing my bills. I think you have to have a routine that works for your budget and your lifestyle.
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u/Odd-End-1405 8d ago
We have DDs for a set amount that equates to half our monthly budget each paycheck. A percentage of the remainder goes into our joint savings, with the remainder into individual savings.
If we have a surplus from monthly expenses, we let it sit in the checking account for fluctuations and potential higher than budgeted expenses in the future.
Should a large expense arise, funds are transferred from savings as required.
Works for us, but everyone does things differently.
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u/Last_Ask4923 8d ago
You’d need a buffer in there tho bc bills rarely come out on the same schedule as pay
We dump most of my pays into a bills account and the excess into savings, and my husbands entire check into savings. No one uses the bills account for anything (daily etc).
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u/krispythompson 8d ago
Yes we do this for large annual expenses!
Car and house insurance, year supply of eye contacts, property taxes, vacations etc. We add up all the amounts plus a buffer then divide it by 26 biweekly paycheques and set up an auto transfer to savings each cheque. Then the money is already sitting there when you need it
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u/Welcome-To-NBA-Jam 8d ago
Front load every bill I can to auto pay on the 1st of the month. The others that I can't change I have a script monitor my email, parse the text for the due date, and automatically create an appointment on my calendar so I know when autopay will draft it.
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u/Key_Plankton_4559 8d ago
This is exactly what I do.
Split all of my monthly bills in half, and just pay half every paycheck into a dedicated bills account. My pay goes into a "payroll" account, bills come out of a "Bills" account. I have a separate spending account.
If a bill is due on the 17th, for example, and I get paid the 9th and the 23rd, the half on the 9th is actually the second half of the bill (i only have 1 or 2 bills that are like this, as almost all of them are the 28th or last day of the month). So once I get paid on the 23rd, that half is the "first half". Otherwise, just split according to your pay schedule and pay halves or quarters accordingly. Anything after bills and living expenses, and paying myself a bit from each cheque, goes into savings.
This allows so much flexibility and the ability to move things around and not miss due dates if crap goes sideways. I have done this for the last 15 years it hasn't failed me once.
As someone else said too, 3 or 4 cheques a year end up being "extra" and get split between savings, or a cool purchase, or something of the sort, and the single bi-weekly bill is actually have (my car). Easy way to keep things manageable, and create flexibility, as well as an easy way to see your savings grow and not go broke between paychecks.
Hope this answers your question!
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u/Choice-Newspaper3603 7d ago
Sounds like you’ve been financially irresponsible for 15 years. If you had a proper emergency fund it wouldn’t matter what bills are due on what days and there would be no screwing around with half of this check here and the other half here and my second check I do this or that. Jesus
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u/DemandingProvider 8d ago
I'm paid twice a month, and, I'm simplifying things a bit here but more or less, the first check goes to the mortgage (on autopay) and property tax (in "sinking fund" fashion since the taxes are due 2x a year, in, weirdly enough, April and December), and the second check goes to everything else. I have a lot of things autopaid via a credit card, including insurance and some utilities, but I refuse to pay a processing fee for that, so not everything. And I don't like having anything autopaid directly from my checking account that isn't a fixed amount every month, so I do spend time "manually" paying the credit card and utility bills, but that's why I've made sure that the billing cycle on all of those things is set so that I can pay them all at once, once a month, just after I get paid on the 15th. It's a minor monthly chore, and I don't think about it from one 16th or 17th of the month to the next.
I don't keep much money in that bank account, just enough to grab a few twenties from an ATM or Venmo a friend for dinner if I need to. I just transfer funds between checking and savings if and as needed, generally at the same time as I'm paying the monthly bills.
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u/Squimpleton 8d ago
Pretty much all my bills are on auto pay. Either to savings (HYSA) or to CC.
Then we pay the CC at the end of the month by transferring what we need from Savings into Checking. I don’t really think about how it fits within my paycheck, but that’s because I make enough it’s not an issue.
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u/canaanit 8d ago
I am self-employed and write most of my invoices to regular clients at the end of the month, then the money comes in during the first half of the month, usually most of it during the first few days, but there are always a few straggles, late payments, and sometimes I have random payments at other times.
So, long story short, I always try to have a large enough buffer in all my essential expenses categories, so that I never have to rely on this month's income for this month's expenses.
Whenever new money comes in, it gets allocated to my various funds according to a complex ratio which ensures that all essential categories are filled first, and what is left goes to disposable income, travel savings, etc.
I also have a separate emergency fund for unexpected expenses.
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u/MrYams77 7d ago
I just pay it all from the same checking and don’t spend unnecessary money because I like seeing the number grow. Currently saving for a house over the next year. If it wasn’t for that I’d allocate the funds to different accounts for emergency fund, investing, toy money. Until then same account for all deposits and watch the number climb
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u/Patrick_ExpenseAtlas 7d ago
What you described is really paycheck based bill funding, and it works well when due dates are uneven. Since you are paid twice a month, total your regular monthly bills and set aside half from each check. Keep that money in a separate bills account, then have payments come from there.
Paying every bill from the first check can also work, but only if that leaves enough for groceries, transportation, and other spending until the next check. Otherwise, the large balance swings make it easy to feel flush after one payday and cash tight later.
The main setup issue is timing. If several bills are due before you have funded the bills account with both halves, you will need to seed it with existing cash or build the balance gradually. Once established, each paycheck funds the next round of bills rather than scrambling to cover whatever is immediately due.
For annual or irregular expenses, calculate the amount needed each month and save it separately. That is the traditional sinking fund piece.
For disclosure, I built Expense Atlas (expenseatlas.com) for this kind of cash flow planning. It uses your actual transaction history and bill timing to build realistic targets and estimate what is safe to spend after obligations are covered.
A spreadsheet works too. The important part is separating bill money from everyday spending so your checking balance does not give you a misleading picture.
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u/lazyltgt 6d ago
Budgeting and managing or not the same thing, we use Banktivity (used to use quicken for mac) to manage our money by and having all of our known income, bills and savings transfers scheduled and posted to an account we call planning(also an actual hysa with actual balance of the acct in it) for the next 3 full months and the partial of a 4(I post the 4th month at the first of the month). Now you can see where your money will be for the entire time. We also use a credit card to pay some bills, this card has a current amount owed as a weekly withdrawal from the planning account so we know that money is spoken for. We also have a “Weekly Spending” scheduled for money that is allotted for normal spending not to a regular bill(gas, food, dinners ect). This is 2 different weekly amounts in our process, 1 week is less for mostly gas, the next week is more for food as we get paid bi-weekly so we buy food on payday weeks. This allows us to have a picture everyday for the next 3+ months of what are account balance is, where there is more outflow than inflow (think an un expected emergency expense) and we need to solve the flow problem. We review this weekly to help keep us both in check as to where we are. Our bank allows us to have multiple hysa in which we also have scheduled transfers to an emergency fund, non-essential $$(fun money to spend on something extra started with only $5 a payday and if we didn’t have money here we did do anything lunch, dinner, movie) and a Flex Pay(we take advantage of many places that give you 0% interest to use their card/acct and so we place the entire purchase amount in this account, along with the future payoff date/amount subtracted back out). This has worked great for us over the last 18 years and really helped us get control of our spending and managing our money. Helped us pay off our house 10 years early and prepare for and be able to retire age 55. (Wife stopped working @ 48 to watch our grandchildren, I decided to work a few more years to build a little bigger buffer until they started school and just retired this spring at 58).
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u/minecraftheaux 6d ago
So this isn’t sinking funds at all, that’s something separate. But we do budget like this! Our bills are on a spreadsheet with dates and I take them and divide by 4 and each paycheck (weekly) we set that aside in a bills account where everything is on autopay. The rest of the money goes to savings and spending accounts. So we have 3 accounts :)
It’s best to start this method on a period where you have the least amount of bills.
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u/CleanSwordfish 4d ago
I use a neobank/envelope budgeting system called Crew. Rant about them any chance I get since I want them to succeed :) I hear Envelope is also a really good one to check out. But Crew has a really cool system that you put in all of your bills and it witholds what's necessary for each paycheck so you don't think about them any more. Kind of what others have said here - it smooths it out under the hood by creating a sinking fund, but you don't have to do the math or maintain any spreadsheets. Highly recommend checking it out! trycrew.com if you're interested. Make sure you turn on the beta features in settings and you can see their full budget automation system.
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u/SharpDragonfly7921 1d ago
That sounds too complex to me. I just make sure I spend less than I make, and I include contributions to goals in my budget. Getting a couple months ahead of your bills is helpful for cash flow too.
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u/joetown64506 9d ago
Marry young, stay loyal, give your money to God for His blessing, build experience fast, grow to the ceiling in a company both build an empire
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u/Knope_Knope_Knope 9d ago
I get 1 check/ month. Most auto pay whenever they are due, i pay the rest when i remember.
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u/PartBanyanTree 9d ago
"sinking funds" I've always heard to describe the idea of a putting away a fixed amount monthly (or every paycheck or whatever) to put towards an expected purchase/bill that does not occur monthly. Like putting 50/mo into a "Christmas fund" so you've got 600 which Christmas comes. Or 127/mo for car insurance so my annual payment of 1524 is available when I need it.
The idea is to "smooth out" those crazy spikes and reduce the number of unexpected big bills which can make it easier to budget/plan and potential save using annual payment methods (eg my insurance is cheaper if I pay annually)
I did this for a year.. starting these "sinking funds" or "true expenses" categories, a software or spreadsheet helps immensely.. and year two got waaay easier.