Believe it or not, one of the best ways to save money is to get organized. Using financial software to keep track of spending and having a system for paying bills will ensure that you avoid unnecessary bank fees or penalties and set aside funds for future goals.
Here are several tips that you can try to help organize your financial life:
1. Use Financial Software
Financial software has come a long way and can save you both time and money. Both Mint and Quicken automatically download and categorize your transactions for you and can even setup a budget for you based upon your past spending habits. The best part is Mint is free and Quicken can help save time preparing your tax return. You can also find free financial software from your bank that can help you keep track of your day to day expenses.
2. Open and Pay Bills as Soon as You Get Them
Paying bills late is a sure way to rack up late fees and penalties and hurt your credit score. Paying bills as soon as you get them is the best way to insure they are paid on time. I use my banks free online billpay feature to schedule one-time payments or setup recurring payments ahead of time. I like the convenience of using a service such as billpay and I have the peace of mind knowing my bills will be paid on time.
Go Green Tip: Enroll in paperless billing to reduce waste and energy use
3. Review Your Budget at Least Once a Month
It’s a good idea to review your budget each month as your bills are probably not always the same amount. Depending on where you live, utility bills most likely fluctuate with the seasons. Holidays can cause spending to spike on things like travel, food, and gifts and if you haven’t set aside money during the year can result in tapping into savings or using credit cards to cover the added expenses. Not having a budget can also lead to using savings or credit cards to cover spending. If you’ve followed my advice you are already using financial software like Mint which will create a budget for you based on your spending history. Over time you will want to add new categories of spending to your budget as needed.
4. Review Your Financial Plan Yearly
Having a financial plan done by a Certified Finanical Planner is one of the best investments you can make. They will provide you with a current snapshot of where your are now financially and work with you to design a comprehensive plan to help you meet your goals. If you choose not to work with a CFP you will want to interview someone with one of the following professional designations: PFS(Personal Financial Specialist), PFA(Personal Financial Advisor). What do you do if you decide not to use a professionally certified financial advisor? Nearly 40% of Americans use a financial advisor and 7 out of 10 surveyed use a CFP professional so most of us do not use an advisor. Is DIY Financial Planning really possible or even advisable? That is what most Americans are doing and from all accounts we are not doing such a great job, nearly 68% of us are not participating in an employer sponsored savings plan and half of us aren’t saving enough.
Clearly most of us struggle when it comes to managing our finances so here are several ways you can get back on track when it comes to your personal finances:
- Use financial software to keep track of spending and to help you manage your budget
- Educate yourself so that you can make educated decisions when it comes to insurance, investing, budgeting, financing decisions, estate planning, and retirement. There is a wealth of information out there and not all of it is accurate information. Here are some great places to get started learning: Securities and Exchange Commission’s Investor.gov and the Federal Trade Commission’s Consumer Finance website. You will want to consult a professional
- Hiring a CPA is preferable for filing taxes to ensure you are paying the appropriate amount of taxes as well as taking the current tax laws into account when making financial decisions. If you decide to go it alone, use tax software such as Intuit’s TurboTax that can guide you with interview style questions to help prepare and file your tax return.
- If you are living paycheck to paycheck or struggling to put enough money aside to save for long-term goals like retirement, a home, or a childs education, you may need to consider investing in your own education or upgrade your job skills to make yourself more marketable.
Learning a new skill or addressing an uncomfortable topic like overspending can be a challenge so my advice is to make a list of your financial goals and priortize them. Break large or difficult tasks into smaller tasks and get started today, you will quickly see results and that will provide motivation to continue your journey towards getting your financial life back on track.
Readers: Do you consider yourself organized when it comes to finances? What organization tips would you like to share?