5 Ways to Organize Your Money
We all want to be orderly and organized about our money. But intentions don’t always lead to actions. And then, of course, life throws in a good left curve any now and again. But it’s important to keep fighting the good fight and organize your money. The payoff for doing so is considerable: not only are your bills paid on time, but you can plan and achieve long-term financial goals. Retirement? Pay for your kids’ college? House renovations? All sounds good.
So here’s the thing: don’t think of being orderly with your money as a boring task. Think of it as getting to map out your future, one week, one paid bill, one deposit into your savings account at a time. And then, in 10 or 15 or whatever years, Future You will look back and thank Right-Now You for being so smart.
Here are five ways to get a little better at putting your finances into serious order.
1. Take Time Every Month to Review Your Budget
The point of sitting down and reviewing your budget each month is simple: Keep tabs on what it is you’re really spending, so you can respond and react if need be. If you go over budget, for example, then you know you need to spend that much less next month. The monthly check-ins keep you connected to the flow of your money — which is where you want to be. No surprises.
If you don’t have a budget and have been kind of eyeballing what comes in and what goes out, commit to making a budget now. It doesn’t have to be hard, or overly detailed. In fact, here are some budgeting ideas for people who hate budgets. No matter what method you use, what’s most important is that you check it out each month, to see if it’s working. Your financial success is built one month at a time, by knowing where your money goes. Knowing where your money goes is why you want to organize your money!
2. Make Saving an Automatic Habit
Don’t make the mistake of saving “what’s left over.” That is a savings tactic that will let you down again and again. Instead, use the wonders of technology to ensure that you are setting aside money for future goals first, right after you pay your bills. If you have your pay deposited into your bank account, you can have your paycheck set up to automagically direct a certain amount of money to your savings account, either through your company or through your bank.
What’s that savings for? First, an emergency fund. You want to have 3 to 6 months’ living expenses for your basics set aside in case of a minor emergency (house repairs) or a medium-term job loss (that’s why 6 months). Having peace of mind is worth every single thing you don’t buy in order to create this fund.
Once you have that emergency fund set up (or even at the same time, if you can swing it), you want to be directing at least 10% of your pretax income into a retirement account. You can do this through your employer’s 401(k) plan, if they have one, or you can set up a traditional or Roth IRA, which permits you to funnel pre-tax funds into these accounts. (Which means you get to make interest on more money, which speeds the benefit of compounding funds; you’ll pay taxes when you withdraw in retirement.)
3. Split Up Your Money
“Divide and conquer” is a state of mind that can make it easier for you to manage your money. What we mean is: divide your dough. Instead of thinking of “your money” as a single lump sum, instead think about “necessities,” “savings” and “everything else.” The goal is to help give you information about how much money you actually have available to spend. Not how much money is in your checking account.
So consider withdrawing your “everything else” money and learning to live with spending cash. It’s a very immediate way of knowing what money you actually have. And yes, checking and savings accounts are helpful. And if you are partnered, you and your partner can divvy up your money among your accounts, making one “business of life” and one “spending money.”
4. Organize and Automate Your Bills
Putting your bills in order by setting up a payment system just takes a ton of money-management off your plate. Not to mention, of course, that it keeps you from having to pay late charges or have your credit report dinged. Today, electronic banking is so streamlined and simple, it’s a shame not to take advantage and automate this entire chunk of your financial life. Here’s how:
- List out all of your recurring monthly bills in one place. Don’t forget mortgage/rent, car payments, utility bills, minimum debt payments, and subscriptions (like streaming services and cable). Write down the due date and the amount due (estimate an average if it fluctuates).
- Put as many of those bills on autopay as you can, paying attention, of course, to when your paychecks hit your account. Many bills will allow you to manipulate the “pay by” day, so you can split them in half: pay some first half of the month; the others in the second half. You can use autopay functions through the suppliers’ websites, or you can set them up through your bank account.
One advantage to setting up payment for all through your bank account, is you have a single destination where you can see what goes out when. It’s the ultimate organize-your-money move.
- For bigger bills that change in size — like credit card payments — set a calendar notification on your phone so that you get an alert before that bill is paid, in order to make sure you have enough money in the account. It’s also a good reminder on your calendar that a big bill is coming up — so maybe you should just say no to whatever the impulse item is that’s got your attention.
5. Make a Plan to Resolve Any Outstanding Debt
Most Americans are carrying some debt on their credit cards — but it’s the most expensive money you can use, based on the super-high interest rates credit cards can charge. This means that everything you buy costs way more in the end. So focus on getting out of debt, fast.
First, list all your debts onto a piece of paper, so you can see it all in one place. Write down the interest rate you are paying on that debt, as well as its monthly due date. Then make your plan. Can you attack the highest-interest debt first to save yourself the most in interest charges? Or possibly start paying off the smallest debt, so you can get that one off the books?
If you’re carrying more credit card debt than you know how to handle, you might consider a debt consolidation loan. This can allow you to essentially take out a single, lower-interest loan to pay back all of your existing credit cards. You have just one bill to pay, will save money because of paying less interest, and you know exactly when you will be out of debt, based on the loan’s term, or length.
If you want to learn more about debt consolidation loans and how they might work for you, reach out to Funding Hawk, a recognized leader in debt consolidation loans (they don’t do anything else). To learn more, read a review post here.
Take some time to commit to a steadier financial future by investing some time in the 5 ideas shared here. You will definitely see the results and feel the relief of being more organized!