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How To Organize Your Finances Once And For All

By admin / July 18, 2018

How To Organize Your Finances Once And For All

Are your personal finances a mess? It can get overwhelming to track all your spending, loans, and credit card debt, but it’s doable. If you’re plagued with anxiety over your financial situation, click here to learn how to organize your finances once and for all.

If your finances are a mess, you’re probably pouring money down the drain.

70% of Americans can’t answer basic finance questions. For many, learning how to manage their money is a problem for tomorrow. Yet today is always the best day to make a change in your personal finances.

That’s why you need to get your finances in order ASAP. Below, you can find out how to organize your finances once and for all.

Track Your Income

To begin with, you need to get a realistic handle on your income. If you think you make a certain figure per month, you need to verify that. Do you make more or less than that figure in reality?

If you want to track your income in the simplest possible way, open a separate (free) bank account. Ensure all your income from any source goes to this new account. That way, you’ll get a clear picture of your monthly income, whether you transfer it all at once or total up at the end of the month.

Alternatively, you can use a spreadsheet or a tracking app like Plum. These are often a convenient way to make comparisons between your income and outgoings.

This is a vital step for anyone, but even more important for those with a staggered, unpredictable income, like cash from side jobs.

Track Your Expenses

Now it’s time to find out where all the money goes.

Expenses can be tougher to track than income. That’s because your expenses often disappear in smaller amounts, on groceries and sundry goods. It’s a shock to discover just how much those small costs add up.

Using an app like Plum can show you a clear picture of your outgoings, and even break it down by category. If you don’t want to leave it to an app, consider ways that will force you to take control of your spending. Only paying by cash rather than card makes buying goods a more conscious decision, for example.

The main trick here is to ensure you’re capturing everything. Don’t dismiss small costs, because they’re often the true culprits sapping your money.

Your bills should be the easiest thing to track. The best way to keep track of bills is to pay attention to your mail or email statements. If you’re throwing them in the trash before you read them, it’s time to stop and take control.

If you have debts, remember to include any repayments you’re making. Working with a financial service like Bonsai Finance can help you control and manage your debt.

Set a Budget

Now you know the true difference between your income and expenses, it’s time to review your monthly budget.

Setting a budget and sticking to it achieves a few things. First, it means you’ll have money left over. That gives you a chance to save, and ultimately turn your savings into more money.

Creating a budget also forces a change in the way you view money. Too many of us hold the view that money between zero and “some money” doesn’t really exist. In truth, that’s where the true change can happen.

If your expenses are exceeding your income, it’s time to make some drastic changes. There’s almost always something you can change, whether it’s eating out less or shopping at a cheaper store. Living above your means will keep you at the mercy of our bank account.

Avoid Extra Charges

When you’re struggling for money, the last thing you want is to find new ways of losing it. But many people get caught up in extra charges all the same.

The overdraft is a common source of extra charges, as are late payment fees. If you use a credit card, ensure you meet the minimum charge per month at least, even if you can’t pay the full amount.

With one eye on your budget, you should be able to lower your use of your overdraft and credit card.

You can think of extra charges as a tax on your poor financial organization. With more awareness, you can avoid those charges – and therefore another money sink.

Set a Saving Target

Your budget should always leave some room for savings.

A fixed percentage of your monthly budget should go directly into a savings pot. Open a separate account for your savings – it may not stay there, but it’ll help your financial organization and ensure you’re meeting your goals.

Your savings target doesn’t need to be grandiose. If you’re strapped for cash, consider saving by rounding off your bank account so your spare change goes into your savings account. Over time, even a few cents will add up. It’ll also get you into good habits for when you’re in a better financial place.

Put Your Money to Work

The super-rich rarely have money sitting idle. While you might not have the investment clout they have, it’s a good rule of thumb that your “spare” cash should always be doing something.

If you’ve managed to set a savings goal you can keep to, then you’re already on the way. You may want to keep some of your savings aside for a vacation or sudden need, but the rest you can put to work.

It’s always important to secure your future. If you already have a retirement savings plan with your employer, you might not have to worry about this step.

For the rest of your savings, consider investing in stocks or peer-to-peer lending. Both of these give you an opportunity to gain investment returns on your savings.

You could even try buying and reselling goods as a side job. Anything which turns your idle cash into another source of wealth can change your financial future, which in turn will give you more options.

How to Organize Your Finances Starting Today

The single biggest thing to remember when you’re wondering how to organize your finances is to start today. The earlier you start, the larger the financial reward. Keep these tips in mind and you can pave the way to a financially secure future.

 

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