Post image for How to Organize Your Finances

How to Organize Your Finances

by Jason on November 30, 2010

4 Tips to Help Organize Your Financial Life

Taking a Saturday afternoon to organize your personal finances, especially when the sun is shining outside or your favorite team is playing on the television, doesn’t exactly sound appealing to most of us.

However, organizing your personal finances is an important project, and once you create an organizational system that you can live with, you’ll be glad that you did.

There are some simple rules of thumb you can follow that are sure to improve your financial management.

Once you have a system in place, paying bills on time, doing your taxes, and saving up for big expenses will be a breeze.

1. Use the KISS principle

“KISS”, in case you haven’t heard of it, stands for “Keep it simple, stupid.”

In other words, while it may be tempting to run to an office supply store and load up on finance software, binders, filing systems, and trays, the more complex your system is, the more difficult it will be to follow.

You don’t need to turn into an organizational dominatrix to manage your finances; you just need to be “organized enough”.

Tax-related receipts, for example, might all get dropped into a big manilla envelope taped to the side of your desk. The simpler your organizational system, the more likely you’ll be to stick with it.

2. Take advantage of online banking

Most banks these days offer free online banking and online bill pay. If your bank doesn’t, it might be time to switch to one that does. Online bill pay allows you to set up all your recurring payments, and then forget about them.

You can set email notifications that tell you when the bill is about to be paid, when a final bill is paid, and so forth. You can even save a few trees by having your monthly statement delivered online rather than through snail mail.

3. Where does your money go, anyway?

At Debtors Anonymous, the first thing you are told to do is write down every penny you spend. If you make a car payment, write it down. If you buy a candy bar, write that down, too. The truth is, most people don’t really know where their money goes to.

In order to organize your finances so that you can create a budget, start to save, or pay down debt, your first task is to find out where your money is currently going. You don’t need to be complicated about tracking your spending. A pocket-sized notebook and a pen will do fine.

At the end of the month, examine what you’ve written down. You might be surprised at what you discover about your spending.

4. Create a budget

Once you have a logical, KISS filing system, you’ve set up automatic payments to take care of paying your bills on time, and you know what you’re currently spending, you’re ready to create a budget.

You can use a budgeting spreadsheet, software, or even a pencil and paper, but a budget is essential to having and organized financial life.

A budget is the cornerstone of any personal financial organization, but for many people, starting a budget is a lot like starting a diet. You begin with grand expectations, only to find yourself sneaking into the fridge, or caving in when the waitress asks if you want dessert.

In order to stick with a diet, two crucial components have to be a part of your plan: first, your diet is realistic. Second, you have a specific goal you’re inspired to achieve, such as fitting into a wedding dress or preparing for an athletic competition.

Budgets are the same way. In order to stick with them, you need to be realistic, and you need to be inspired. If you currently spend $150 per month eating out, for example, telling yourself you’ll only spend $40 per month eating out is unrealistic.

Start by packing yourself a lunch a few times per week, then gradually work your way down. Similarly, find a reason that inspires you to stick with your budget, such saving up to take a dream vacation or getting a new car. Remind yourself frequently of your inspiring reason to stick with the plan, and you’ll be much more likely to keep it.

Although taking the time to organize your finances in the four ways mentioned above may not be nearly as fun as watching a football game, once you’ve done it, you’ll feel relieved and proud of yourself – and you’ll be on your way to improved and stable personal finances.

This article is from Bob who runs ChristianPF – a personal finance blog dedicated to helping Christians become better stewards of what God has provided.

Google+ Comments

Related Posts