Soon, annual council rates will be due for homeowners. Will you pay in instalments or upfront?
Many years ago, when I was a young lad learning about budgeting a colleague told me that he pays all bills monthly in instalments, rather than upfront to help with managing his cash flow. Even when it was more expensive to pay in instalments he felt it was better than paying credit card interest because he rarely had the money to pay upfront.
Made sense on one level, but can you see the problem in his approach?
Yes, it is true, that the extra cost for instalments is typically less than credit card interest rates.
But expenses like council rates, insurance renewals and car registration are all foreseeable expenses, and therefore able to be planned for.
Secondly, if he rarely had enough money for predictable commitments that suggests he was overspending in general.
Cover your infrequent commitments
If your goal is to save more and be better with money, one of the great incremental steps you can take is beginning to build savings to cover your infrequent commitments, so you can afford to pay upfront in full.
This change in habit helps you go from paying interest to earning interest and thereby get more life out of your money.
Plus a natural byproduct of planning for the predictable is that you have a more accurate reference of what you can afford for impulses and indulgences.