Bills to Pay: Learn How to Organize Your Personal Finances
Do you know the difference between accounts payable and accounts receivable? These are a few tips on how to plan your income, along with tools for organizing your payments.
There are so many bills to pay and receive every day, and there are numerous ways of payment that you will have to pay attention to everything so nothing piles up. You will have to keep in check your personal funds for monthly bills covering your telephone, electricity, water, rent, food, as well as any other expenses that tend to come along.
A survey by Dow shows that 47% of young people between 18 and 24 years old do not have the habit of controlling their personal finances, while 23% confirm that they have the habit of organizing and planning their finances .
In this article we will see how to control and organize your accounts payable in the best possible way. Check it out!
Accounts Payable vs. Accounts Receivable
First of all, you need to understand what accounts payable and receivable are, as well as the differences between them.
- Accounts payable
- Fixed expenses
- Miscellaneous expenses
- Accounts receivable
Accounts payable
These are all financial expenses that the consumer may have: fixed and one-off expenses.
Fixed expenses
These are the ones that happen every month, regardless of the variations that may occur over time.
Some examples: rent, insurance and bank fees, water, electricity and telephone bills, for example.
Miscellaneous expenses
These are expenses that are outside the norm, that is, outside the fixed bills. It could be an unexpected appointment, such as home maintenance, urgent outings or trips.
Accounts receivable
They are classified as cash records, that is, everything that comes in as income to the consumer, for example, any sale made, the rent of a property owned, payment for a service provided, and the fixed monthly salary .
Accounts payable and accounts receivable difference
What the key difference is between accounts payable and accounts receivable is what “comes in” and what “goes out”. Accounts payable is outgoings, or the expenses of accounts payable, while accounts receivable are called inflows for that reason precisely because they are the consumer’s capital.
However, they are directly related. After all, accounts payable cannot be greater than accounts receivable, so financial control is necessary at all stages, both for what comes in and, especially, for what goes out.
Tools to organize your accounts payable
Applications and spreadsheets are tools that help in all stages of financial control, especially when it comes to accounts payable.
Spreadsheets
One tip for organizing your finances is to use spreadsheets.
Excel is a program that can be used for this and does not require advanced knowledge. There are several templates on the internet for creating spreadsheets and you can get inspired to create your own. One example is the expense spreadsheet from Idec , created for those who want to control their finances and consumption habits. Another example is this expense spreadsheet.
How to organize accounts payable?
Good financial management, whether personal or professional, requires the basics: organization, scheduling and deadlines, and spending limits.
Organization
Organizing requires prioritizing. To prioritize, you need to list all your expenses: fixed expenses and occasional consumption that arises during the month. This will allow you to generally review your outstanding balance, that is, your total expenses within a month.
Once you’ve done that, it’s time to prioritize. Prioritize fixed expenses that occur monthly, both individual and family, regardless of anything else.
Next, list other expenses, which are those that occur outside of fixed expenses. At this point, you will need to devise strategies to pay everything off and not go into the red: loans and renegotiations may be a way out, if the debt is greater than the capital.
Appointments and deadlines
Fixed expenses can be scheduled as soon as they arrive, so it is important to know the dates and deadlines for each bill to be paid. At this point, it is worth creating a routine with your finances: at the beginning or end of each month, schedule all payments with fixed dates and installments.
With bills that do not have fixed dates or installments, you need to be more careful, but there are apps and spreadsheets that can help with this.
In the meantime, pay attention to another tip, which is about negotiating the dates of bills and credit cards, so that they can all be paid on the same day.