The Simple 'Payday Plan' Gen Z Can Use To Avoid Late Fees All Year
Many Gen Zers have traded in their graduation gowns for work attire, landing professional jobs without knowing how to budget for monthly expenses.
As a result, they could incur late fees for utility bills, credit cards, and car and student loan payments if they don't pay bills on time. So how can Gen Z afford their expenses without putting themselves further into debt when they’ve just started their careers?
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MoneyLion spoke with financial experts to find out. Here is a simple payday plan that Gen Zers can use to help avoid late fees all year long.
Use Your Smartphone Calendar To Manage Late Fees
You can manage late fees digitally by adding your bills and due dates to your phone's calendar, according to Prisca Benson, the money coach and founder of Our Green Life. She recommended using a distinct, memorable color, then setting up active notifications.
“Alternatively, if you prefer paper and pen, you can maintain a physical bill calendar to refer to manually every time you sit down to pay your bills on payday,” Benson said.
Open All Mail Upon Receipt
It’s important to open your mail when it arrives rather than letting it get buried in a pile or deep within your inbox with advertisements and other correspondence.
“Open all mail – including every bill – upon receipt, whether it comes online or in regular mail and deposit cash or checks as received,” said Sean Fox, president of debt relief at Achieve.
He recommended “paying bills immediately upon receipt and scheduling payment dates online, such as for regular monthly fixed payments, like mortgage, or noting pay dates in a dedicated area you frequently check, which could be anything from an online calendar to a basket on your kitchen counter.”
Set Your Utility Bills to Autopay and Negotiate a Level Billing Plan
To avoid late fees, Benson suggested setting your utilities to autopay and scheduling the withdrawal for two days after your payday to ensure your funds clear.
She also recommended calling your providers to “negotiate a new monthly rate or request a level billing plan, so your costs are predictable year-round.”
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Set Up Autopay for Loan Payments the Day Your Direct Deposit Drops
It’s essential to set up your autopay transfer for loan payments the moment your direct deposit hits, per Benson. This will prevent Gen Zers from incurring late payments by spending their money on restaurants, streaming subscriptions, shopping, food delivery and other expenses before their monthly loan installments are paid.
“If the due date doesn't align with when you get paid, contact your lender to move the billing cycle to a date that better fits your payday schedule,” Benson said.
Make a Plan for Paying Down Unsecured Debt
Fox suggested making a plan to pay down unsecured debt, such as credit card and personal loan debt.
“Few investments can top the rate of return, with average interest rates on credit cards topping 20%,” he said. “Not only will it mean fewer bills to pay, with no worries about interest and late fees, it means you’d no longer effectively be spending 20% more than the purchase price you paid for anything you put on a credit card and are carrying debt on."
Putting money toward paying off debt means you'll eventually have more to invest elsewhere.
“Paying off debt means you have that much more money available to use for those goals you’ve set,” Fox said. “When working toward things that are important to YOU, you will be much more motivated to save and spend smartly.”
Stay in Good Standing on Non-Monthly Bills
Not every bill is due monthly. Some are due every quarter, while others may come every six months or annually if you pay them in full to avoid installment fees.
For intermittent costs, Benson said to “calculate the total yearly cost, divide it by 12, and set that amount aside in a separate bucket or envelope housed in a high-yield savings account every month so you’re never caught off guard.”
When renewal notices or annual premiums are due, the money is already available — and earning interest in a high-yield savings account.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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