One Way to Stay Ahead of Rent Payments

Published by DNA Rentals, LLC on April 29, 2023.

Use your bank to automatically move money to another account, timed with your regular income, before rent is due, and pay rent right from that account.

Here’s an example.

Let’s say your rent is $1,000, due on the 1st of the month and you get paid every other Friday.

1. Set up an extra account next to your checking and savings account that you will only use for rent money. If you can, give the account the name Rent.
2. Have your bank schedule automatic transfers of $500 from the account where you deposit your paycheck into your new Rent account for the same days as your paydays.
3. Ensure that your $1,000 rent is paid from that new Rent account electronically, automatically on the 1st day of every month. If you don’t know how, ask your landlord.

With this system set up, every other week your Rent account will be funded with $500 on your paydays and once a month it will be drawn down by $1,000. You will have taken control of paying rent on time and should never have a late fee. Plus, you’ll more clearly see how much you really have left to spend on other expenses.

Over a year, you’ll have 2 or 3 extra $500 deposits into that Rent account for an extra $1,000 or $1,500. You could transfer that back into checking manually, or you could leave the extra in your Rent account and know you have an emergency fund for rent in case you must take time off work.

Once you try this system, you’ll see how it can work for other goals, like filling an emergency fund with 3 months of living expenses or planning to spend on an annual family vacation.

For an alternate approach, search the web for "the envelope system."

Example of automatic transfers for the Rent account

And so on. Because of months with an extra pay day, by year end the Rent account will have a surplus over $1,500, which is a nice emergency buffer for future rent payments or to cover security deposit and first month rent for a future rental.