If the mere thought of your finances sends your mind into a tailspin, you’re not alone. Plenty of people find it difficult to talk about their finances, especially if they don’t feel like they have their money under control. The good news is that financial organization may be easier than you think. Invest a few hours to get everything together and create an organizational system that works for you. You’ll have a complete picture of your finances that is much easier to update over time. Here’s what you can do.
1. Collect Financial Statements
One of the best ways to start is to figure out what you have. Make a list of all the institutions that hold money for you, from your local bank or credit union to investment accounts and retirement funds. If you don’t have online access to all your accounts, now’s the time to grab a printed statement and create a username and password. Take a moment to bring up the latest statements for each one. Write down the current amount and annual yield, where applicable. If it makes it easier to compare, print a copy to PDF or paper for review.
2. Organize Bills
You probably have more monthly bills than you have accounts, so it’s really important to bring them under control, as well. Create a list of your bills, with the amount you can expect to pay each month. Services that vary in price throughout the year may need a range, instead of an exact dollar amount. Make sure that you have online billing set up for each one. For the accounts that aren’t on automatic bill-pay, pick a date that works for you and schedule it. You’ll be less likely to miss a payment, and you can fit it right into your budget.
3. Streamline Financial Processes
The financial world offers tons of automation, which means that you can turn many of these processes into something you don’t have to think about:
- Set automatic transfers into savings or investments.
- Consolidate accounts with little money into larger accounts at the same institution.
- Roll over old 401k accounts into a fund that helps you meet your financial goals.
- Buy budgeting or tracking software, or even just a spreadsheet.
If you still file your taxes on paper, now might be a good time to consider looking for a tax software company.
4. Cut Back on Offers
It’s common to receive offers of credit, but you can manage how much you get. They can turn into big clutter piles in your home. If you’re trying to get your budget under control, these offers can also entice you to spend more than you have. To keep your mail at a manageable level, visit the sites to opt out of mail and electronic offers. When you sign up for online services, be sure to check the right box for communications. You’ll keep better control over your inbox that way.
5. Track Expenses
Beyond bills, you’ll have a number of expenses that you have to pay each month. These expenses might include:
- Groceries
- Dining
- Regular medications
- Transportation costs, such as gas or bus passes
- Incidentals, like gifts or entertainment
If you can, document your expenses over the past three months. The process will give you a clearer picture of how much you regularly spend on everything, not just your bills.
6. Create a Budget
Once you have all this information together, creating a budget might be fairly easy. Start with your net income per month. If you get paid every two weeks, you might need to adjust your budget to account for the number of payments you get each month. Subtract all of your expenses, including the ones that don’t have a monthly bill. If you have a positive number at the bottom, you have extra money you can use to build an emergency fund or increase your savings. If the number at the bottom is negative, you may need to find ways to trim back your expenses.
7. Pay Attention to Changes
Getting a complete financial picture isn’t static, which means that you will need to keep an eye on it. Interest rates on variable credit accounts can change over time, sometimes by a significant margin. When you make certain types of investments, you could earn a lot of money, or even lose some. It’s wise to pay attention to these changes because it helps you stay informed about your current financial situation. If you’re thinking about making a big financial decision, such as starting a business or buying property, you’ll need the most updated information.
8. Set Reminders to Update Your Finances
Ideally, most of your finances should be set up so that you can keep an eye on them, but you’re not constantly on the hook to pay bills or track the money in your accounts. Once you get your budget to a manageable level, set a reminder once every couple of months to evaluate how it’s going. It will give you enough data to know when you need to make a change, without making you focus on it to the point of anxiety. For example, if you end up with a big tax refund, it might be worth changing your withholding so that you can get more of that money each month.
Organizing your finances can feel intimidating, but it is worth the effort. It might surprise you how little it takes to get it going. Make the investment of time, and you’ll be reaping the rewards of better management and lower stress.
