As overwhelming as organizing your personal finances may seem, breaking things down into a few easy steps can help you to feel in control. Being mindful of your debt, spending habits and overall expenses puts you in charge and keeps you there.
Here are some pointers to follow while getting your personal finances organized.
Get organized and avoid clutter
Designate an area of your home for dealing with bills. Whether you’re using apps, spreadsheets or hardcopies in envelopes, keep everything in one place. This organization will help you to be better prepared when dealing with payment dates and amounts owed.
Customize your space; go old school with a label maker and pinboards. Or load all of the banking apps onto your tablet and schedule reminders to keep you on track. Use sticky notes and calendars to give you a visual reminder for payment due dates. Paying the bills will feel like less of a chore in a comfy, personalized space.
Regularly shred unnecessary documents and receipts. Keep your tax papers, warranties and legal documents in a chosen spot and confirm with your accountant how long to keep everything else.
Use the opt-out choice whenever you can to stop receiving unsolicited marketing. Choose softcopy email statements if possible. The fewer paper piles you have to rummage through, the better. It’s also a good idea to keep your protection software up-to-date and regularly change your passwords.
Set a limit on your debt from the start
Try not to run up more debt than necessary. Allow no more than 20% of your net wages to be spent on credit. Aim to pay as much as you can in full since credit card interest rates can be high. Calculate your total owed and how much of that is interest. There are online calculators and finance apps to help you. Then you’ll better understand how long it will take you to pay the debt off.
Manage Your Debt
Prioritize debt repayments. Some options available to you are debt consolidation. This is when all the various amounts are tallied together and you only pay one place for everything owed. Talk to the credit providers about more favorable rates on what you already owe. Shop around and compare other financing options. You might find a better deal somewhere else.
Control and cut back on expenses
Take stock every month of how much money you spend. Some of the worst offenders can be your streaming service or electric bill. Avoiding careless usage will help to keep your bills down. Cancel subscriptions that auto-renew as well as unused memberships. Avoid late fees and overdraft facilities.
Get into the habit of checking your credit card and other accounts to be sure there aren’t any unexpected charges. Try budget-stretching hacks like cooking enough at dinner time to have leftovers for lunch, rather than buying on the run from vending machines. Take-out coffee is more expensive in the long run, buy a thermos and bring enough to share.
Avoid impulse buying
Think about all those trendy items you pick up just because they’re there… those are impulse buys. If you stick to what you need and not what you want, you’ll save the money usually spent in the spur of the moment. Set yourself a budget, shop from a list and buy items you use most in bulk.
It’s fun to be frugal
Challenge yourself to find activities that don’t involve spending money – or at least not a lot. A library card will keep you busy and cost much less than regular trips to the bookstore. Keep an eye out for sales, half-off and other promotions. Get together with friends and swap pantry staples, cosmetics and clothes – if you don’t want it anymore, someone else might.
Insurance is key
Looking after your health now can save you lots of money down the line. The same goes for your house, possessions, even the car you drive. Spend a little money protecting your assets now – your personal fitness included – rather than running the risk of something going wrong in the future and dealing with unexpected costs. It’s okay to shop around for the best deal available too. You may be pleasantly surprised by the policy’s affordability.
Be careful with your credit rating
Well-maintained accounts have high ratings. This is how lenders decide how much credit to grant you in the future and if you qualify for preferential rates. Making use of facilities such as reminders or automated bill payments means you don’t have to remember what to pay and when – keeping your rating high. Contact the credit bureau to view your score.
Sign surety with caution; no matter how much you’d like to help a friend or family member, doing so extends your good credit to them. This is a risky option if they can’t afford the repayments. Your good standing may be jeopardized by someone else’s poor habits.
It’s never too late to start saving
Get into the habit of putting something into your savings account. No matter if all you can spare is 10% of your income, it’s still progress. A dental emergency would be all the more painful if you weren’t able to afford treatment. Your savings act as a buffer in times of financial uncertainty – unemployment, illness – so that you don’t have to resort to using credit. Investment portfolios and pension funds count as savings accounts too.
From here on out
Familiarize yourself with bank charges. That way, you’ll spot errors or fraud quickly. The faster you can recognize and deal with identity theft, the better. Regularly review your bank statements, looking for any spending habits or patterns. Try using budgeting apps or online templates which can help you to track your spending.
Sort out what’s essential and what you can cut back on. It’s okay to ask for help from professionals. Financial advisors, credit lenders and debt counselors have access to professional-level resources which can help you to reach your goals that much faster.