Life Skills: Finance - Bill Organisation

Bills are one of the few things we all wish we had less of. On this page, we will show examples of priority and non-priority bills, and how to sort out your non-priority bills from your top priority bills, and giving a brief explanation of the differences.

So let’s start by getting straight into the bigger problem most households face, that is knowing what a priority bill is and why you need to pay these bills first and foremost so here is a list of priority bills and nonpriority bills as listed by Money Advice Service, Citizens Advice, and Ofcom.

Priority bills

• Mortgage, rent, and any loans secured against your home
• Food
• Court fines
• Council Tax (You are entitled to a council tax exemption when living only with other students, or a discount otherwise)
• TV Licence
• Child maintenance
• Gas and electricity bills
• Income Tax, National Insurance, and VAT (please note this is usually taken out of your pay before you receive it unless you are self-employed)
• Hire purchase agreements
• Missed payments owed to DWP (Department for Work and Pensions) or HMRC (HM Revenue & Customs)
• Telephone/broadband

Please note: it should go without saying but in a realistic budget after your rent/mortgage you should look at your food bill. It should be a top priority and put it into your bill organization before any other bills. This however does not mean any takeaways or meals out unless you have no alternative.

Non-priority bills

• Water/sewage (cannot be disconnected by law)
• Credit cards
• Overdrafts 
• Unsecured loans including payday loans
• Store cards
• Catalogues 
• Overpayments of benefits - apart from tax credits
• Money owed to family or friends
• Online subscriptions (Netflix, Amazon, Spotify, loot boxes)

When we say variable or fixed we are referring to if these bill's cost's can be changed (variable) or if they are fixed the cost usually can not be changed with the exception of council tax and child maintenance.

So how are priority and non-priority bills decided?

Well everyone has a different idea of what a priority bill is but the ones listed above are a compilation of categorizing between the national debt advice service and Ofcom and Citizens Advice. 

The reasons why these bills have been categorized into their category of priority and non-priority all comes down to the consequences of not paying these bills. Not paying priority bills can lead to a more severe consequence than non-priority bills, for instance, failure to pay a tv license can be punishable with either a fine or prison sentence. Whereas not paying non-priority bills can still have major implications, but nowhere near as severe as a priority bill, such as not paying your online subscription where the only consequence is your service will be stopped until you pay the bill.

Now non-priority bills should still be paid on time if you can, otherwise, they will impact your credit score and this could penalise you at a later date - refer to our page on credit scores. If you are unable to pay you should always contact the billing provider and try to arrange a repayment agreement. Most providers' staff have protocols to try and find a payment plan that is manageable for you and if you are struggling to meet all of your payments you should always seek help from a financial advice service we have linked some services below.

But ultimately when it comes to your circumstance you may have some bills/costs that you may not fall into any of these categories but after some thought, you may find that these bills/costs are important to your wellbeing/quality of life and they should be given more consideration to when making budget around bills.

So once you have started sorting out a budget and have figured out your priority and non-priority bills, you will likely find there is a fair amount of extra things you pay for such as one-off costs or services.

While in the mindset of wanting to save as much as possible it can be easy to get swept away in the moment and start cancelling everything. But you may find that some of those extras were important to you and your wellbeing or your quality of life.

After all, saving is great but it shouldn't come at the cost of your happiness all the time. So for those extra bills why not try the handy tool we have made to get you to start thinking about those extra bills a little bit more before just cancelling them, then in a month taking them all back out again.

 
 
So how do I organize my bills?

When it comes to organising your bills, you should put them in order of what must be paid first - this makes budgeting simpler in the long run. So if you are doing a budget your costs/expenses section should look a little like this:

1. Priority bill
2. Priority bill
3. Priority bill
4. Priority bill
5. Priority bill
6. Priority bill
7. Non-priority bill
8. Non-priority bill
9. Non-priority bill
10. Non-priority bill
11. Non-priority bill
12. Extra cost
13. Extra cost

References

Money advice on how to prioritise your debts

Citizens Advice

work out which debts to deal with first
Debts and types of borrowing

Ocean Finance: what is classed as a priority bill
Ofcom 2014 report
What bills do students need to pay for?
Citizens Advice Scotlands money map tool

Financial Services:

Money Advice Service

National Debtline

Citizens Advice Service

StepChange Debt Charity