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Budgeting

What is bill smoothing?


Roisin Broderick, Content Specialist, Keystart

14 May 2020 • 1:30 mins

Bill smoothing refers to the practice of breaking down large household bills into smaller, more frequent payments. Utilities like gas, electricity and water providers may send you a bill four times a year. These bills can amount to a substantial payment to cover. Bill smoothing can make these payments easier to manage.

Break it down

Most utilities are happy to arrange different payment arrangements for you, usually set up as a direct debit. You may have an option to pay fortnightly or monthly. You may find it useful to time your bill payments with your pay cycle too.

At Keystart customers are able to change the frequency of home loan repayments from monthly, to fortnightly or weekly. This can have some financial benefits too.

How to pay off your home loan faster

No harm in asking

If you have a particular bill that always catches you out – give your service provider a ring and see if there is a bill smoothing option available, if you think that may be more suitable for you.

Set up your own bill smoothing

Even if your service provider doesn’t offer bill smoothing, most banks allow you to set up multiple accounts. Using the ‘bucket’ or account organiser approach, you may choose to set up an account that is solely for paying bills. You could total up all your bills over perhaps a 12 month period. Then you could calculate an amount that you would need to transfer each month, fortnight or week to your bills account to cover these expenses. You would need to contact each service provider to arrange for payment to come out of your bills account.

Having problems paying bills?

You may find it useful to refer to MoneySmart’s guide

MoneySmart: Problems paying your bills and fines

If you are facing any financial hardship over your home loan repayments, please get in touch with us as soon as possible so we can discuss your circumstances and options with you.

Keystart recommends that you seek your own independent financial advice prior to making any decisions about your financial needs. Any examples given in this post are provided for illustrative purposes only.

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