Being organized with money and finances is about more than just paying bills on time and having some cash to spend. While you might look at those around you and think that you’re doing pretty well compared to them, without some organization, planning and good habits, it’ll be tough to keep it that way if you face an unexpected or significant change in your life.
No matter how much money we have or don’t have, it’s what we do with what we’ve got that’s important. When it comes right down to it, comparing ourselves to what we see those around us doing, or what we hear in the news, isn’t the best way to see if what we’re doing with our finances measures up.
How we use our money should be determined by what is important to us, and the goals we have for our future, not by what others are doing. However, when life gets busy, organization can fall by the wayside. Before you dive in to revamping your budget, spend some time getting organized with your money.
How to Get Started with Organizing Your Money
Being organized with your money and automating some of your financial decisions makes day-to-day money management easier. Here are some ways to start:
Set Up a System for Paperwork and Bills
Get your financial paperwork organized. Some people like to put receipts in envelopes. Others set up file folders, either in a drawer or electronically, to file their statements and separate what’s new and what’s been paid. It’s also important to organize the paperwork that needs to be dealt with, but that doesn’t necessarily require a payment, e.g. RRSP contribution statements that need to be reviewed for accuracy.
Use a Calendar to Set Up Money Reminders
Most of us use a calendar to remember our work and personal appointments, so why not use a calendar to manage our money? In a way, our money has appointments too, and it’s our job to get it to each appointment on time.
Use a wall calendar, agenda, free online calendar or app for your Smartphone (here’s a list of money management apps from Simon Hill at Digital Trends) to help you remember where your money needs to go and when. Give each dollar a job and make sure it gets to where it needs to go. Highlight paydays, how much automatically gets transferred into savings, what you’re keeping for spending, and when each of your bills and obligations need to be paid.
Balance Out Your Payments and Expenses Over the Whole Month
If you look at your calendar and notice that one payday has more obligations than another, contact your lender and your utility companies and move some dates to balance things out a bit better.
Balancing things out will help you avoid thinking that you’re broke for half the month – and have lots of extra cash to spend for the other half. Feast or famine cycles can actually cause you to reach for your credit cards more often because you know that money is coming to make the payments. The problem, though, is that you get into a habit of always paying for the past and never getting ahead.
Just like with our jobs, we don’t work 24-7 for half the month and take the other half off – we spread our work out to make it more manageable. Managing the obligations we have with our money should be the same.
Out With the Old; In With… But Hang On a Minute
If you’ve made it this far without getting yourself in over your head, work to improve on what you’re doing rather than trying something completely new. If you already pay your bills on time and have some spending money, look at your savings and see what you can do to top it up. Or see if you can find ways to pay off debt a little faster.
This is where tracking your spending will help. By jotting down what you spend for a week or two, you might discover that your coffee buying and eating out habit amounts to $50+ a week. That’s $200 a month that could be put to work helping you top up your savings or pay your mortgage down faster, while still eating out once a week. It’s all about making choices with what we have and appointing our money wisely.
No One System to Organize Money Works for Everyone
Practice leads to progress, not perfection, so be realistic. Finding a system to organize your money that works for you will take a bit of time. And what works for one person doesn’t necessarily work for the next, even if you live under the same roof. Try not to get discouraged if it doesn’t all come together the very first month. You’ll get another chance next month to work on it some more!