Money is not everyone’s strength. Some of us are great savers, while others are spenders. There are people who love to crunch numbers, and there are those who could care less about tallying up their spending.
But even if it’s not an enjoyable task, it’s still important for you to keep your finances organized. Luckily, it doesn’t have to be complicated. Here are five easy ways you can organize your finances.
Review Your Budget Weekly
First off, if you don’t have a budget, now is the time to make one. If you already have a budget, great!
Review your budget weekly, if not daily, to track where you are spending your money. This is where you can make adjustments if needed for unexpected expenses, or if you notice that you are getting a little too loose with the purse strings in some areas (I’m looking at you eating out!). Checking in weekly makes it much faster than if you wait until the end of the month to organize your finances and transactions.
Have a Structured Filing System
You don’t need to keep every scrap of paper and receipt forever, but you do need to make sure that what you do keep is organized. Label your files with things like: utility bills, car or auto expenses, insurance, medical, income, house, etc. Separating them by year will help too.
If you think you can use a receipt to help with taxes, keep that in a separate file. You can purchase a scanner that will make your papers electronic so you could go paperless. (Just be sure you have everything backed up onto an external hard drive and organized in folders, just like you would with paper folders.)
Declutter Papers Regularly
You only need to keep only seven years’ worth of taxes. When the next year comes, throw out the oldest one. You should keep receipts and bills relevant to your home, car, and other assets, pay stubs, investments and anything that is business related (if applicable) or that you’ll itemize for your taxes.
The IRS can only go seven years back when investigating your finances. Once you have checked your receipts against your bank account and budget, declutter and shred it to organize your finances.
If you have more than one bank account, merging into fewer accounts can help keep track of where the money is and be less confusing. You can have accounts such as checking, emergency fund, debt fund and general savings. You know where money is and you aren’t tempted to spend that emergency fund.
Having your accounts in one bank will help too, as long as you have self-control to not dip into your emergency fund for non-emergencies. Keeping fewer accounts gives you less to reconcile and keep track of to help you organize your finances.
If you have multiple credit cards, you should consider consolidating those as well. If they all are maxed out, work diligently on paying them off one at a time. As a card gets paid off, don’t use it again. Having few debts to keep track of will help organize your finances. You can also consider consolidating debt by moving debt from one credit card to a lower interest card. This will create less payments to keep track of each month, and it can help you pay off your debt quicker due to the lower interest rate. The fewer cards the better.
The basics of personal finance are easy to manage with the right tools and know-how. Online budget tools like Personal Capital can help show spending habits. Moving to automatic online bill pay helps you not to forget about paying. Once you organize your finances, you can breathe easier as you’ll have less to keep track of in your head.
What strategies have you used to help you organize your finances?
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