Financial organization is essential to being in control of your money. Even if you make a modest income, tracking your cash helps you to be an efficient money manager, since every dollar you make is accounted for.
It’s not difficult to keep track of your finances, but it takes a bit of set-aside time each week and some diligence.
Below are 5 essential components of well-maintained checking, savings and credit accounts:
Know the Basics
The first step toward organization means knowing precisely what you bring in each month—either as a set figure or on average if you are a seasonal worker—and knowing what all your expenses are. This is not necessarily the same thing as a budget; in fact, I do not budget per se. Yet, I do know exactly what our income is and what our purchases are each month. This is essential, for you can’t be in control of your money if you aren't fully aware of where it's going and what you can and cannot afford.
Keeping track of your money's activity could potential "save" you money. For instance, there are some people who use a debit or credit card who never check their statements each month. Often, erroneous charges appear (such as a "free" magazine subscription or the Club Penguin membership you forgot to cancel); these charges will be automatically tacked to your credit or debit card every month without your intervention. As well, review your bank statement each month to connect with your purchases and remind you of items you may need to return or which to cut back on if spending is getting out of hand. It's equally important to verify all returns to ensure credits to your account; imagine returning an item and not receiving the credit; then you lose the item as well as the cash!
Another significant benefit of organized finances is avoiding late fees. Some consumers pay an exorbitant amount of money in fees and are not even be aware of it, particularly credit consumers who pay the minimum payment each month. You can save a lot of money by paying on time.
Review and Modify
Periodically review your bills and expenses to make sure they are current and that you still need the services. For instance, if you have two vehicles and only one is used for work, contact your insurance company to categorize the other vehicle as recreational; this will lower your annual insurance premium. Contact your credit company if you are inadvertently double charged for an item, and investigate any errors. Also, eliminate services you are paying for and no longer need, thereby reintroducing these funds to your total income.
Being organized financially should not be a burden. The biggest hurdle is often a psychological fear of knowing the truth in black and white. Once you review your expenses and eliminate the unnecessary, you begin to take control of your money. You may find that much of your income is spent on frivolous purchases and decide to cut back, thus “increasing” your income. You may also discover that you're not putting as much as you'd like toward charity, or spending more than you thought on clothing or electronics. By spending a little time each week to ensure your spending is optimized, you will experience a great sense of accomplishment as well as enjoy the peace that comes with simplifying your finances.
Doing the dishes, making your bed, feeding the dog...these all require a commitment or you'll find yourself swamped with overflowing sinks, messy bedrooms and very hungry and unhappy pets. Likewise, your finances deserve regular time and attention. The benefits to financial organization far outweigh the modest effort it will take to keep you on track and in the knowing. It's your money...give it the time and attention you deserve and earned.
Sharon L. Cece © 2009.