"Financial Planning ... it's not always about money."

People Have Money, but They’re Forgetting to Pay Bills

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David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
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More Americans are falling short on their financial responsibilities, like paying their bills or meeting with their financial adviser. In many cases, it’s happening because, they say, they simply forgot.  



Financial advisers and researchers say plenty of people are missing payments because they can’t afford them. Stress due to inflation, the Covid-19 pandemic and stock-market volatility is also causing them to miss items on their money to-do lists, they say. 

Forgetting to rebalance your portfolio can lead to higher tax bills and poor investments, while missing a credit-card or other bill can damage your credit score or lead to higher rates and late-payment fees, say the advisers. 

For the six months ended June 30, JPMorgan Chase said 1.05% of its credit-card customers were 30 days delinquent, slightly up from 1.01% a year ago. For auto loans, it was 0.69%, up from 0.42%. At Wells Fargo, credit-card and auto-loan delinquency rates also rose. The banks don’t disclose which customers are a day or a few days late. 

More Americans are behind on their utility payments as well. As of May, more than 1.4 million residential Pacific Gas & Electric Co. customers were past due on bill payments, compared with about 915,000 customers in February 2020, the utility said. 

Missed payments can stem from several problems, yet consumers say they’re becoming absent-minded about money. In a recent survey by WalletHub, people cited forgetting as the top reason they would miss a credit-card payment this year. Financial shortfalls was the second most popular reason. 

Kelly Klingaman, a financial planner in Austin, Texas, said she’s lately noticed more clients missing meetings, taking longer to call back and taking more time on the financial to-do’s she’s asked them to complete. 

“Clients are carrying a heavier mental load these days, built up in part by what feels like 50 years’ worth of events happening in a single week. No wonder they’re distracted,” she said.

Ms. Klingaman said she is taking more time to speak to clients about their heightened anxiety before nudging them about the asset allocation change she’d like them to consider or reminding them to transfer some of the cash in their checking accounts to an investment account.

Sarah Pepper, 28 years old, said she diligently pays her bills on time to avoid any late fees but recently forgot to pay her family’s rent. 

Ms. Pepper’s family moved to New York City from North Carolina. She said the move, along with worries about the higher cost of living in the city and overall price increases for food, gas and diapers for her 6-month-old baby, has made her feel anxious. She wasn’t checking her bank account as regularly and only remembered to pay the rent when her landlord sent a notice stating it was two weeks past due.

Ms. Pepper paid the $3,295 rent right away, along with a $100 late fee. 

“I keep kicking myself wondering how I could have forgotten,” she said.

Cognitive psychology can help us understand why we forget about financial tasks, said Sarah Newcomb, director of financial psychology at Morningstar.  

Our brains perform two different kinds of tasks when faced with information: processing and maintenance. We generally can’t do both at once, which is why it’s so difficult for most of us to do complex math in our heads, she said. 

The more tasks crowd our minds, the less likely it is we will go back and refresh our memory of previous tasks we need to complete. For instance, if you get an email saying your electric bill is due and then get a call that your daughter is sick, the flood of tasks needed for your daughter will likely divert your attention for long enough that the memory about the electric bill fades away, she said.

“It may seem as if the big crises deserve more of our attention than our petty daily tasks,” Ms. Newcomb said.

There are several strategies you can use to increase your money memory in addition to writing things down or automating your bills, behavioral psychologists said. And always speak to your doctor if you’re concerned about your memory. 

Morningstar’s Ms. Newcomb suggests linking something you need to remember to something that’s already in your long-term memory to create an anchor. For example, if you know the water bill is due on Saturday, and that’s the day you go to yoga, you could try to link the two by saying, “When I fill my water bottle for yoga, I’ll remember to pay the water bill,” she said.

Prioritization is critical, said Michael Liersch, head of Wells Fargo’s advice and planning center. Determine what are the most critical financial tasks, such as maintaining enough money in your checking account, and address those first.

Also, schedule a time where money-related work is your only focus. Use an accountability partner, like a friend or family member, to keep that commitment. Let them know what you want to accomplish in that time to ensure you keep your commitment, Mr. Liersch said.

Patrick Logue, a financial planner in Naples, Fla., said some of the tasks that clients are forgetting lately are ones they don’t see as pressing, such as estate planning. This preference for short-term thinking over longer-term planning is a sign of stress, said Dan Egan, managing director of behavioral finance and investing at investment-advice company Betterment.

Break large, scary tasks down into smaller, immediate ones, said Mr. Egan.

“A sense of progress and control will empower you,” he said. 

Write to Veronica Dagher at Veronica.Dagher@wsj.com

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting