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St. Mary's Credit Union BlogOrganize Your Finances - Expert Advice from a Professional Organizer

Organize Your Finances - Expert Advice from a Professional Organizer

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Similar to cleaning out a long-neglected garage, basement, or storage unit, organizing your finances can seem like an unbelievably daunting task. Whether not knowing where to begin, not feeling they can effectively manage money, or simply feeling discouraged at the perceived difficulty of the task, many individuals put off organizing their finances. In fact, according to the Consumer Financial Protection Bureau, 70% of Americans have no established budget and 40% prefer not to think about money management at all. The Consumer Financial Protection Bureau also posits several reasons that they think prevent Americans from getting organized and properly managing their money. These reasons include:

  • Fear of Failure - Due to the overwhelming nature of first starting a budget, many individuals choose not to begin. 
  • Instant Gratification - It is human nature to prefer having something good now, rather than working hard and waiting to get that something good later in life. For this reason, spending and saving priorities are unbalanced with many choosing to spend now, instead of saving for later. 
  • Feeling Invincible - Individuals without a budget sometimes do not believe they need one. Whether due to financial prowess, a large income, or a lack of financial understanding, failing to manage money because you do not think you need to can lead to serious future financial woes.
  • Indecisiveness - Creating a budget and organizing your finances requires an individual to make countless choices. Sometimes the sheer number of decisions required for budgeting feels too overwhelming, and consumers choose simply not to think about it. 
  • Always Finding a Reason to Spend - Individuals who overspend often have good reason (in their minds) to do so. Sometimes the individual justifies an extra expense due to a special occasion or makes an exception because he or she has worked overtime and feels the indulgence is deserved. Excuse or no excuse, breaking the budget is still breaking the budget. Unexpected expenses should be thoroughly considered prior to taking out your wallet. 

Consider how you feel about creating a budget, thinking about money management, and organized finances. If any of these ring true for you, then it is likely due time that you took steps to get organized and take control of your finances. 

How to Organize Your Finances

The following are simple steps you can take to organize your finances and finally free yourself from the burden of an out of control wallet. 

  1. Create a Monthly Household Budget - In a Forbes article financial advisors, the professional organizer of the financial world, are asked for advice on saving money in a consumer climate in which saving and money management seem like a challenge equivalent to climbing Mount Everest. The number one step, they say, is to track expenses. Without a budget, it is impossible to accurately track your expenses. Use a spreadsheet to establish categories for monthly spending and saving based on your total monthly income. Do not worry too much about getting it right the first time; use your first monthly budget as an experiment and a tool to better refine and improve your spending categories for the next month. By tracking expenses you can ensure that any added expenses or impulse buys will not break the bank, resulting in a negative net income (spending more money than you earn) for the month. You might also consider using an electronic money-tracking tool like the Manage My Money feature built right into our online banking platform. This tool automates tracking your expenses, allowing you to view charts and really understand where all of your money goes. 
  2. Automate Savings - A time-tested savings rule is to pay yourself first, yes first. The principle is that if you automatically save a set amount each month, eventually you will not even miss it or include it as money that could potentially be used for other budgeted expenses. By setting up automatic transfers or asking your work's payroll department to split your direct deposit between a savings and a checking account, you will never even have to worry about forgetting to transfer to your savings account or deciding to spend the amount you want to save. 
  3. Avoid Late Fees, Overdraft Fees, and High Interest Debt - Putting money into any of these things is essentially throwing it away. Yes, sometimes it might be necessary to use a credit card with a high interest rate, but you should take every measure you can to pay the balance off as quickly as possible. Also, never incur late fees or overdraft charges due to carelessness. Keep track of your monthly bills' due dates and make sure you pay them on time. If you have trouble remembering, consider setting up automatic payments using electronic bill payment. 
  4. Create a Filing System - In addition to budgeting, organizing finances also requires good record keeping which is necessary for future tax and legal purposes. Create folders stored in a single location (a filing cabinet if you own one) for separating, organizing, and storing important financial records. These documents might be related to medical expenses, insurance, taxes, loans, your home, business expenses, credit cards, brokerage accounts, and bank accounts. To ensure filing never becomes overwhelming after establishing a good system, commit to filing mail, receipts, invoices, statements, and other important documents weekly or bi-weekly depending on the amount of mail you receive. You can also streamline your filing system by storing some or all of your documents electronically. Sign up to receive paperless statements and bills that can be accessed electronically. You can also invest in a scanning system to scan an electronic image of your important documents to be stored on a secure external hard drive or with a secure and trusted cloud based data Storage Company. 
  5. Start Small - Trying to tackle the entire challenge of organizing your finances in one fell swoop is a mistake. If you take on too much all at once, you will likely feel overwhelmed – especially if you are starting from scratch. Schedule time to dedicate to individual tasks which lead to achieving larger goals such as saving receipts for a month to create your budget's spending categories or sorting through a pile of un-filed documents for storage. 

Making a commitment to organizing your finances so a professional organizer would be proud will help you get your spending on track and also achieve your savings goals. If you create a budget, a filing system, and stick to them, your future self will thank you.

Related: Need Help Holiday Shopping on a Budget?

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