Before you begin organizing, do a little cleanup. Consider closing any bank accounts or lines of credit that you don’t use. Having too many open accounts makes it difficult to get a clear picture of what you are spending each month.
Then go through the financial paperwork you currently have, including tax documents, outstanding bills, and receipts. Come up with a system of organization—set aside a space for paid bills, W2s, unpaid bills, credit reports, and any other specific documents you frequently receive. Start with some file folders, a file box, or letter sorter, and build from there. This may take you some time, depending on how disorganized your paperwork is, but keep at it! Having a reliable, functional system is well worth the effort.
Once you’ve created the foundation of your system, use one of these three financial services (or a combination of the three) to keep your money well-managed.
One: Budgeting
Budget structures come in all shapes and sizes and you may need to experiment for a few months to find one that fills your needs. Here are some starting places:
- Begin collecting receipts. Put an envelope in your glove box for gas expenses and two envelopes in your wallet: one for necessities like groceries and toiletries, and one for entertainment, fast food, and other non-essentials. Write down your totals on the front of the envelopes for quick reference. After a few months, sit down and figure out your average expenses in each category.
- Record your transactions. Invest in a pocket debit and credit register. Make a habit of writing down every transaction (including the balance in your account afterword). This is particularly helpful if you frequently overdraft your accounts or have a hard time remembering what your balance is.
- Generate a personalized budget. Make a list of your monthly or weekly expenses (or start with an online worksheet) and set a maximum budget for each category. You can make this your starting point, or use the average amounts from your expense envelopes to figure out how much you should allot for each expenditure.
Two: Tracking Software
If you are working with multiple bank accounts and lines of credit, you may benefit from investing in a collective tracking program. Software packages like Quicken have tutorials if you don’t consider yourself particularly tech-savvy.
Web-based programs, like Mint.com, have a dashboard feature which allows you to see the balance of each of your accounts in one place, including:
- each of your checking accounts.
- each of your savings accounts.
- your retirement fund.
- your outstanding loans (such as student loans).
Even better, almost every Mint.com feature is free. This big picture view can help you track your spending and saving, avoid unnecessary debt, and better understand your overall finances.
Three: Debt Counseling
After budgeting or using tracking software for some time, you come to the realization that you don’t know how to eliminate your outstanding debts. At this point, you may benefit from consulting with a financial management firm like Paddon & Yorke, even if you’re nowhere near bankruptcy. From Toronto to Texas, there are people struggling with debt.
Many people hear “debt counseling” and assume the phrase refers to a last-ditch effort for individuals struggling with the prospect of bankruptcy or foreclosure. Debt counseling is required in bankruptcy proceedings, but it can help you well before your situation gets so dire. Most management firms offer free or low-priced initial consultations in person, over the phone, and online. These sessions usually take less than an hour, during which a debt management professional can help you work out a budget (if you’re still having trouble), develop a strategy for combating your current debt, decide what, if any, other steps you should take.
Don’t wait to begin organizing your finances. So much of your life depends on your money being managed well—from the roof over your head to the transportation between work and home each day. It may take some time to feel like you’re in control, but don’t give up. Living debt and worry-free is well worth the effort.
No comments:
Post a Comment