Taking control of your money does not have to be an extremely difficult process. Learn how to organize your financial life and clean up your wallet.
Managing your finances can feel like a full-time job, but a necessary one if you want to have an organized financial life. Keeping a good organization system when it comes to our finances is a great way to take control. Living frugally also helps keep us out of debt, plus there’s not as much to organize. Here are some ways to organize your financial life.
Set financial goals
Decide what your financial goals are by asking yourself what it is that you are saving for. Do you need to save for retirement, kids’ college education, vacation, new house, new car? Grab a notebook and write down all of your financial goals – big and small.
Track your monthly spending
Track your spending over a one month period so you can see where all of your money is actually going. Keep a record of how much you’re spending on subscription services like Netflix and Amazon Prime every month. Write down the small things, too, like that Starbucks coffee you think you have to have on a daily basis. (By the way, you don’t need it!) If you have a subscription and actually take advantage of it, keep it, but if it’s something you rarely use and can do without then get rid of it.
Related: 12 Ways to Get Books Free or Cheap
According to a study conducted by creditcards.com, 65% of people with debt don’t know how long it will take them to get out of it. First, figure out what you owe and make a plan to steadily pay it down. Think back to your financial goals and let them be a motivator to attack your debt. One way to do this is to pay an extra $100 a month towards your credit card bill, for example. Consider carpooling with a coworker to save on gas, babysit a few nights a week, or be a dog walker on the weekends for the extra cash.
Be prepared for emergencies
Unfortunately emergencies happen. Last month our septic system completely gave out and now we are going through the process of having to hook onto the town sewer system. Luckily I’m very organized when it comes to paperwork, so I had everything together and ready to go. The last thing you want to do when an emergency occurs is tear the house apart looking for your financial papers. Take inventory of your important papers like insurance policies, bank and investment statements, recent tax returns, mortgage statements, etc. Store everything in a file cabinet, or safe, and consider making copies of each. Stash the copies in a separate place, such as in a security deposit box at your bank.
Know your credit score
Did you know that insurance companies, cell phone carriers, landlords, and even utility providers can use your credit score to determine how financially responsible you have been? Not keeping an eye on your credit score can cause you to miss out on fraudulent activity. Mistakes happen and are actually quite common. Your FICO score is calculated based on data from Experian, TransUnion, and Equifax. Check your credit score regularly once a year for free with annualcreditreport.com. Your bank or credit card company may offer free credit-score monitoring. Check out Credit Karma as well, which also offers free credit-score monitoring.
Create a budget
Creating a monthly and yearly budget is very important when trying to organize your financial life. There are so many different ways to create a budget, but you have to create a budget that works best for you. My husband took the Dave Ramsey course through our church and that’s what we go by. He uses a spreadsheet to keep track of all of our expenses. It has really helped to see exactly how much we are spending and where. This system has also taught him more about living frugally.
Managing your finances now will help you in the future. When an emergency happens, you will be prepared. Saving money now and paying off debts steadily helps you to live comfortably when you retire. Not having debts hanging over us is a huge stress reliever. Take the time to get your money under control and organize your financial life.
I am a member of the VigLink affiliate program and a rep for Elevated Faith. I might receive a teeny tiny portion of a sale if a link is an affiliate product. Clicking on the links cost you nothing, yet that small click helps support my blog and my family. I appreciate your support so much! See disclosure here.