Nobody likes paying bills. Not longer than a few years ago, most people met the end of the month with the dreaded feeling of writing out checks and licking the back of envelopes—UGH!. Over the past five years, many people in the United States have transitioned their bills from the check stuffing days to now merely having to fill in an amount and simply point and click. With some providers sending you an e-bill alert now, you may not even have to remember when to pay the bill.
I’ve learned over the past couple of years that the next generation of bill payers (your Generation X and Generation Y crowd) uses something that I like to call the Field Goal Rule when it comes to deciding whether or not to click the ‘pay now’ button. Here’s how the rule works. When a particular bill comes such as cable television, cell phone, or local water bill comes, a bill payer has a number in their head on where they think the particular bill should be that month. If it is a recurring bill, they start to get that number stuck in their head as the center between the left field goal post and the right field goal post. For example, if your cable/internet bill is typically $119 per month, if the bill is somewhere between $110 and $130, you will pay the bill without questioning whether anything is wrong with the bill.
If you think about it, this is probably one of the unintended consequences of on line banking. While most of it was designed to speed and convenience to save you time, it could potentially cost you money by you avoiding actually reading your bills to make sure what was charged to you was actually accurate. I think what you may see from marketing companies over time within the billing departments is to run regression analyses to figure out how much they can actually raise a bill without it even falling on your radar. This means that your regular bill may only go up by $8 per month, for example, so it won’t really faze you at all to make a change or review the bill. What we actually experience today is that most of the monthly billing companies will make small raises in their normal bill every year to increase their revenue, but they don’t make it large enough to make you want to change providers.
Since we are in the 4th quarter and hopefully you are on the way to the end zone this year with your financial plan, here’s a great tip to score you three extra points. The best way to kick a field goal financially is to review your bills at least once a year and make sure you are paying for what you are getting and what you really want. By doing this exercise, you are bound to find one service to cancel or one line item on a bill you can cut as you bring your finances in 2012.
Go to www.oxygenfinancial.net to request a consultation with the leading financial experts for Generation X in the country.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc
Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice and Smart Money Moves to the X and Y Generation.
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