We all have direct debits, standing orders and other payments, usually on a monthly basis ranging from everything including rent, mortgage and car payments to Netflix and gym memberships.
But what day of the month do your payments go out?
In this episode I explain what your payment dates say about you, specifically how you manage your money and budget month-to-month.
I am going to give you some practical suggestions which will help you to become more aware of your payments and effectively plan your payment dates so that you can make your money work for you.
Or perhaps you’re in a couple and you have reservations about opening a joint account? I explain how you can do this to provide reassurance to you both and have control over your finances.
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Highlights from this episode:
(01:09) Take control of your money
(06:13) Brutal honesty about your payment dates
(10:18) Set up a bank account specifically for bills
(13:44) Build a surplus to protect yourself from hard times
(17:45) Plan for the unexpected
(21:48) Money is a tool – make it work for you!
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Using Other People’s Money: How to invest in property 4th edition
Make More Money from Property: From investor thinking to a business mindset 2nd Edition
Property for the Next Generation: Securing your future in uncertain times 2nd Edition
The New Estate: Insights from the 22nd century
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The Values Manual: Understand what your values are and how they can be key to a successful business
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Episode 017 Transcript – Do Your Payment Dates Give You Away?
Hello! Do your payment days give you away? You know, there is so much we either weren’t taught at school or aren’t being taught at school about the value of money, of payment days, of money maths, money management; and it’s so crucial, particularly as we are entering a time when all the media is going to be talking about is the word “recession” and panic and fear are going to set in, and you can rise above all of that by understanding how money works.
Take Control of Your Money
And what I’m going to teach you today is how your payment days may be giving away exactly how you feel about money. So, let me just explain this to you. Payment days are a great way to extend the life of your money. If you receive a bill from me–now, if you receive a bill from me, I expect you to pay it; that’s a different kettle of fish. But if you receive a bill, generally from one of the larger companies like maybe your mortgage lender or anything else, there are usually terms on those invoices. And usually, an invoice will say that you’ve got 30 days to pay, or it will send you the invoice today, let’s say the first of the month, and tell you that your payment date is on the 14th of the month.
Well, what you can do is you can phone those companies, you can contact them and you can ask them to change your payment date to a date that suits you. And what you want to do is to push that date as far away as possible. So, if for example, you had an invoice or a bill or a standing order, or a direct debit that is due at the beginning of the month, and you can push that date through to the end of the month, you are going to be in control of that money all the way through the month rather than handing over control of that money to someone else. And that’s what you need to do over the next 12 months.
You need to control your money. And so, I believe that if money is important to you as a tool, you will already have arranged your standard monthly payments to suit your purposes, i.e., pushed them to the end of the month so they are as far away as possible without you breaching the terms of your rules. So, you don’t want to have a standard payment date, for example on a credit card, that says it must be paid on the sixth of the month, and then you don’t pay it until the 26th of the month without asking the credit card company first. So, don’t breach your payment terms, but this is actually negotiable. And I don’t think many people know this.
So, if you are not someone who is consciously aware of the importance of money, both as a tool, or of money maths as a skill, then you will have allowed someone else to dictate these payment terms to you. And of course, anyone sending an invoice will want to get the money to them as soon as possible. Because if I can get you your mortgage bill, and then I can get you to pay your mortgage to me, the bank, as soon as possible, then I now have your money. I can earn interest on it. Obviously, we’re not earning a lot of interest at the moment, but I can basically be earning interest on it.
But more importantly, I can put it to work. When I control the money, I can make that money work for me. If you control the money, then you should be making the money work for you. So that’s a real–I always use the term “control” because, you know, I like the word control and I like control. And so, controlling money is actually something that I see as very positive. It’s not about being greedy. It’s not about being negative. It’s not about being mean. It’s about being smart with your money.
And I think that if you know this phrase; there’s something like “you are either the author of your own story or the actor in someone else’s play,” that’s the same thing with the money. You are either in charge of your own money, or your money is being given to somebody else and is being used in their life and their business and their model the way they want. I think really, actually it was a Wayne Dwyer quote. He’s an American self-help author–that’s such a hard sentence to say [laughter]. And what I’ll do is I’ll look up the exact quote for you, and I’ll make sure that I stick that in the notes at the end so that you can go follow that link if you want.
So, the big question here is: does money matter to you? Is it important? Do you value it? Do you monitor it? I’ve said this so many times, so the answer to that question should be yes. And is it protected? Now, I don’t think that if you are already this far into listening to the Wealthy Life podcast, that you’re going to be someone who falls into a category that desires and covets money and simply wants money from an ego perspective.
But the concept of money itself becomes more refined when you value money as a tool, rather than simply for what it can buy for you. As money gets tighter over the coming year, this is going to be a perfect time for you to ramp up your management–money management–skills. And what I’m going to do is I’m going to prove to you that your payment date will reveal how much you value money and therefore how much attention you give it.
Brutal Truth About Your Payment Dates
So, let me just tell you a little story that one of my clients told me. She was on the phone explaining how she’d got her second property rented and the tenant had asked the question, could she move the payment date through to the 14th of the month as this was when she got paid. Now, you could argue that making your bills go out as soon as you get paid is good money management.
Well, in some senses, it is. It is a technique if you don’t feel that you are strong enough to manage and budget your money on your own, and if you feel that you need your money to be gone because you can’t control yourself–see, this is where my evidence comes in place. I bet that if you are someone–for example, potentially this tenant–who needs all of their bills paid the minute the money comes in so that they know what they’ve got left, they are not, first of all, monitoring how much they spend and knowing what that number is anyway. And in knowing that number, they are then not budgeting for the variable costs that come in in a month.
And I can say this, I’m not being mean about a tenant, I’m not being mean about you; I’m saying this from the point that when I was on benefits, when I was first on my own with my two daughters, both under three, when we were first on our own, I had to do this. I had a very limited amount of money that came in every month. I did not give my money straight to the rental people and straight to the electricity. I moved all my direct debits and my payments to the end of the month. I put my money into an account. And in that account, I earned interest–those were the days! I earned interest on that money. And then I only withdrew the money at the end of the month to make these set payments.
So, I controlled the money and I benefited from keeping the money for longer. So, the trick is to move your direct debits and any standing order payments, or any regular payments that you have, out as far as you can. And in order to do this, you’ll need to phone the owners of those debts or those bills and check with them that you can do it, don’t just decide to do it.
So, money management as a skill, if you like, is easy to acquire, but it does require a shift in thinking. It requires you, as I’ve said before, to see money as a tool, but money as a tool that can help you and support you to create the life you want, namely a wealthy life. And when you start to appreciate money is not the bringer of short-term joy–a new purchase, a trinket, something that you’ve seen on an advert on social media (I know we’re all guilty. I’m guilty of that. And I kick myself every time I do it.) When you see that money is the provider of long-term financial resilience, the ability to cope whatever happens because you know you’ve got that elasticity in your budgets.
It’s the provider of financial security because you know your numbers, you know what’s coming in, you know what’s going out. And more importantly, when you appreciate money as a tool, you can see it’s there to help you choose how to spend your time. Money can help you choose how to spend your time because you start to have more money in your life. And it’s not always directly linked to working; you’ve got savings and then eventually you move on and you have investments. And then, like a lot of my clients, you have a second, or even sometimes third stream of income. You’re not reliant on working all the time, because you have this alternative, time-free streams–fairly time-free–streams of money coming into your life.
And this is what I teach my clients. It’s the first thing I do with a client. Whether they want me to work with them, to be a mentee and help them learn how to invest in property, or whether they want me to do it for them and then eventually step in and become a business mentor and teach them how to take over the properties that I’ve helped them to acquire.
Set Up a Bank Account Specifically for Bills
So, let me give you a couple of tips here on exactly what you can do. So, if you are a single person or if you are a couple that are early in your relationship–or no judgment, actually, whenever you are in your relationship–and what you do is you pay for certain bills separately, my suggestion would be that you open a second joint account and into that account, you transfer your own luxury money. So, you’re going to keep all your bills separately. That’s fine. You’re going to have the way that you’re going to carry on paying in exactly the same way, but each of you needs to have two accounts. You need to have one account in which your direct debits, standard regularized payments, go out. And if you’ve downloaded the spreadsheet that I’ve shared with you on many of the other podcast episodes, you’ll know that I refer to this as “enough,” the “enough money” that covers your basic costs, or these are your basic costs. They need to come out of one account. Then the money that is left, your “more than enough” money goes into a second account.
Now, you can choose to do it either way. You either open a second account and transfer your spare money, your money for luxuries, into that account. Or you keep all your wages and your luxuries in one account and you transfer out the money that is there to pay for all the direct debits and the standing orders.
Then, as a couple, if you don’t have this already, then really what you are doing is you are opening up a joint account. And the joint account is there to handle all the bills. So, then what you do is you put all of your family bills into one account. While you are transferring them, you have the conversation with the owners of these bills and standing orders and direct debits, and you have a conversation with them about moving all of your payment dates to the end of the month. So, everything is now in one place.
Both of you can see it. This is also a massive shift in thinking, but also confidence and security for both of you. When you both have an account that you can see the money coming in and out for the basic bills that need to be covered. Frequently, this is handled by whoever is the financial provider in the family. And I spoke about that in the very first episode that I spoke to you. And equally, the nurturer is the one that needs to handle things on a day to day. And they obviously don’t–oh, sorry, not obviously–they don’t always have an oversight of the finer details of these bills.
If you open a joint account and you can both see this, then you can both be aware of the comings and goings of both the basic bills that you have to take care of, and then the surplus money that you have for the luxuries and the non-essentials, if you like, that we have in life.
Just to say it one more time, because this is crucial: make sure you contact the major suppliers of your mortgage, your rent, your insurance, your utility bills, anything that you put onto direct debit and get them to change those dates as close to the end of the month as you can. And then what you do is you have all of that into one account and you transfer the individual share that you’re going to pay from your individual income accounts into this joint account, sufficient that it is to cover the bills.
Build a Surplus to Protect Yourself from Hard Times
Now, what I would also add in here for both of you, whether you are single or whether you are couples; with this bill account, what you want to start doing is creating a surplus. And you want to build up a surplus of a minimum of three months, up to maybe a maximum of six months. Now, this is an incredible trick; it both calms the mind because you know, no matter what happens, you are resilient and it gives you the assurity of being in control. So, if you’ve got sufficient money in your savings account, then why not transfer over immediately either three or six months of money to cover three to six months’ worth of bills and give yourself that calming knowledge that you are resilient?
If you don’t have spare money in savings, then gradually build up this surplus in your bills account by overpaying your bills, say, by 10% a month; it’s a good goal to aim for. If your monthly expenses are 2000 [pounds] a month and you are a couple, you’ll be paying 1000 a month in; I’m asking you to find another 100, and that should be very doable. And if it’s not doable, you need to go back over your spreadsheet and you need to find it. But I think that you are going to find that it’s actually very doable.
There are a lot of people still, as I said to you talking about a recession to come, but I know from working with my clients, that there are still an enormous amount of people out there that have both a lot of savings and, actually, a lot of flexibility in their budgets. And some of that is to do with the changes in the way we work; working from home instead of the travel costs and everything else. But also, I think it’s probably if you’re not traveling to work, not buying all those coffees every morning from Costa on the way to getting on the train, that type of thing. Now, there will also be some people listening to this podcast who will think that this is too much pressure. And I just want to reiterate again: I’ve been there. I am only sharing with you strategies that I’ve used when I was on a benefit, my two daughters were under three and I did these strategies then.
Now I’ve been with Bob for 20 years and we still overpay into our bills account, although, because I’m an investor, and because I have that investor mindset–and I will come to that in later shows–I don’t leave a lot of money in the bills accounts, because I’m constantly collating our money and finding new ways to make it work harder for me through investments.
Because there’s two ways that you can make money; you can make it passively by leaving it sitting in a bank account and, you know, whatever the prevailing rate of interest is–which isn’t much at the moment–but as interest rates go up, theoretically, the building societies and the bank should increase their savings accounts. We’ll see if that happens. But on the flip side of it, you can actually force your money to make more money by Leverage, and by making it work by putting it into investments. And I’ve spoken to you about Leverage before when I was talking about the Five Principles of a Wealthy Life; it’s finding the resources and then making sure that they are working hard for you so that you don’t have to.
Now, I also use this technique on my property accounts. So, when the rent comes in on my properties, I don’t immediately take that money out. I am looking to keep collectively in the region of three to six months of cash in the accounts. So, should anything happen I’ve got the surplus there.
Plan For the Unexpected
Now, three to six months, of course it depends on how many properties you’ve got, but I want to keep at least the cost of two boilers in my account so that I have got plenty of money there should anything happen. And boilers are usually the things that are going to trip you up because when they go, they go suddenly. Now out of all of this, so why should you listen? Because there are changes coming down the line, there is going to be lots from the government and the media, and more importantly, social media as well; telling us that things are dire.
That might be true if you want to look at certain statistics, but we all know the thing about numbers is it depends which two numbers you add together and which angle you look at them at as to whether they tell you a good story or a bad story. The truth of it is, as it stands at the moment, interest rates are still at an all-time low. That’s great news. Not only are interest rates at an all-time low, but I can tell you for a fact that the property market is absolutely crazy out there. There’s no sign of the property market letting up at the moment. And it’s actually quite hard to find and buy properties at the prices that I want to.
So, I’m not listening to–I’m aware of, but I’m not worrying and fearful of–what the government is saying. I am putting in place strategies now and have been for a number of months, in fact, since COVID for me. So, for the last two years, I’ve had strategies in place that means that I am resilient, whatever happens. I’ve got the surplus in the bills accounts, and I am encouraging you to do that too. And the result of all of this will be, you’ll be more financially confident. You’ll be more confident because you are keeping an eye on your accounts. You know what’s going on. You know that you are financially secure. You are conscious of your spending and above all you’ve got this resilience for three to six months should anything happen. You don’t have to panic. You created a window of time in which you can plan if you have to react, but better than reacting is being proactive and putting all of this in place now.
Money is a Tool – Make it Work for You!
So, let me give you some key actions. Number one: review all of your payment dates; speak to the owners of those payment dates and move as many of them as you can to the end of the month so that you remain in control of your money for as long as possible. Open up a standard bills account, however you do it and then transfer all of these core bills, all of this essential spending, into this one account where you can easily monitor the comings and goings of those direct debits. And just because they’re on direct debits, doesn’t mean to say that you shouldn’t check them on a monthly basis; things can go wrong, stuff could be taken out more than you want, or forgotten or anything else.
So, it’s a, a nice, easy place to gather all of that core spending together. It also makes it very easy to enter into the spreadsheet when it’s all on one account as well. And then, have a second account in which you have your surplus money, the non-essential money, the money that you are going to spend on the more luxury and the items that you have more choice over, whether you buy them or not. And, quite frankly, that is SkyTV and Netflix and a gym membership and whether you have a takeaway, whether you buy a new top or new shoes, et cetera. All of that goes in there. And you don’t necessarily have to stop buying those things, but if you start separating them out into your core essential spending and you’re non-essential luxury spending, you are going to be much more conscious of what you are spending your money on. And being conscious about your spending can only be a good thing at any time in the financial cycle.
So that’s it. Three things. Move your payment dates to the end of the month, set up a core account, and set up a non-essentials account. And so, really what I wanted to do in this episode was nurture the idea–of course, I do water the idea, put some water on and get your little seeds growing–the idea that money is a tool and you can make money work for you. And one of the ways that you can make money work for you is by controlling it.
We already know from the media that the government wants you to believe that things are going to get tough. And they want you to believe that because they want you to react. But what happens is they trigger fear, and out of fear we get a self-fulfilling prophecy, because you can’t give people information that they need to react to if you then don’t give them the skills and the lessons on how to act, how to react.
So, I’m giving you some information. The house is on fire, but if I don’t explain that doors and windows are exit routes, and what you need to do is open a door or a window and leave the building and you will be safe, then you don’t know what to do. Conversely, if it’s pouring with rain and there’s a dreadful storm outside, if I don’t explain to you the door is the way into a building where it is warm and dry, you’ll be outside wet and cold and freezing. So, the government is giving you the warning. They’re giving you the warning that there’s a fire coming or a bad storm coming, and they’re not giving people the skills.
And that’s what I wanted to do with this podcast. I want you to have such simple skills that probably some of you are doing them already. In which case, my first point was your payment dates will prove how good you are with money, because if you’ve moved your payment dates and you have your account set up like this—fantastic. Then you have just spent 20 to 30 minutes listening to me and hopefully, what you’ve got is reassurance that you’re doing the right thing, but not necessarily any actions out of it. But there will be some people that are listening to this podcast and you need to take the action. You need to decide that no one is going to make you afraid. I can show you the skills to rise above the panic and continue to flourish for the next 12 months.
And that’s why I want you to make sure that you subscribe to this podcast to go back and catch up on past episodes that you might have missed. Revisit your favourites if you’ve been a regular in your listening, for which I’m very thankful. And if you haven’t already, would you please leave a review? Please share this podcast with your family and your friends. Get your partner to listen to this, get your children to listen to this. And let’s all make a plan for a wealthy life rather than sit at home worrying about this thing called a recession that is going to be done to us. We can rise above this. Yay! We can rise above this. All right?
So, thank you for your precious time listening to the podcast. As you know, my name is Vicki Wusche, and I hope that this episode has given you some much needed “Whoosh” in your life. I look forward to speaking to you on the next episode, particularly if you remember to subscribe and review. Thank you very much.
You’ve been listening to Vicki Wusche – wealth strategist, author, and property investor. With a name like Wusche, spelt W-U-S-C-H-E, I’m easy to find on all the usual social media channels. Do come and connect. Been loving the podcast? Then join the listener Fan Club, where I will share extra insights and host webinars. Links to this and more of my story are both in the show notes and on my website: vickiwusche.com. See you on the next episode!