Tips to Organize Your Financial Life

For someone with a history and pattern of financial chaos, the first step toward better money management could be to just organize your financial life. Organizing your financial life requires a clear picture of where you are and where you want to go with your money. I believe you must know where your money is going, and where it’s being spent, to manage it effectively. Knowing where your money is going is one of my GoldenRules of financial management. Additionally, you must know where you are in terms of income, and debt. You will also need some SMART financial goals to lead the way to a better financial future. To help you accomplish this task, set up a system to track your expenses, income, and pay bills. 

Getting organized can be overwhelming and can stop the best of us even before we start. To help you get organized, use the organization tips below.

Tip #1. Get Organized by Setting Up a Tracking System

Set up a system to track expenses appropriately for your needs. The system could be as simple as a piece of paper and pencil or a spreadsheet on your personal computer. Before you do anything with your money, you must know where you are spending it and where it’s going. Again, this is a GoldenRule to managing money better.

In this case, knowing is more than half of the battle. I believe knowing allows you to see your spending and adjust it to help you meet your financial goals and not overspend. It’s a must for managing money effectively. You must know where your money is going before you can manage it effectively. 

Tip #2. Track Your Spending

If you have not already done so, start documenting your spending. Use that paper and pencil or spreadsheet and document, document, document. Once a week or even every day. Once a week will be less time-consuming, but from experience, it’s easy to forget some days, and daily, at least when starting, maybe the better way. However, tracking your spending will get easier the more you do it because you are creating a good habit.

Tip #3. Set Up a Consistent Place to Work Your Money

Whatever way you decide to track spending, you need a place to do that. Therefore, set a place where you will weekly or daily record your expenses, pay bills, and compare financial goals to reality. I call this “working your money”. Working your money is one of my GoldenRules to manage money better.

I believe in working your money. Please know that working your money takes time, it’s a job. However, you must work your money because if you don’t, someone else will, and you will be wondering where your money went and how you spent it on that.

Also, when working your money, compare your spending plan with your actual expenses. Comparing will help you stay focused on your system and organize your financial life. And be consistent. Pick a day and time to work your money, Sunday after church, Monday after work, Saturday morning, unless you have kids because they will be up before you. 

Tip #4. Don’t Make Your System Too Complicated (KISS)

In setting up your system, it is helpful to be as thorough as necessary for your needs but not too complicated to where you get bogged down, bored, and do not continue with it. The key is to have a system that is not intimidating to you. One of the goals of the process, besides organizing your financial life, should be to help you learn to manage your finances. As a money nerd, it’s hard to keep it simple sometimes, but try to use the KISS principle, for Keep It Simple Sweetie.

Tip #5. Organize Your Financial Life by Using a Spending Plan

If you are an over spender and cannot stick to your spending plan, perhaps setting up two bank accounts can help. Set up one account that you would use to pay bills and another discretionary account for discretionary expenses. The amount is based on your spending plan and used for discretionary expenses only. Using a spending plan is another GoldenRule.

Be aware that setting up a system that works well for you may take some trial and error. It is important to be patient and to make a commitment to working your money. Sometimes a perceived problem in the plan could be reluctance on your part and turn into a great opportunity. 

Final Thoughts on Organizing Your Financial Life

There are huge benefits to organizing your financial life. Ultimately organizing your financial life will help you make better financial decisions. Additionally, I believe that organizing helps you to be a better steward of your money. Additionally, the plan can help you develop a healthy relationship with money. You will start to see money as a tool to help you achieve financial goals. How do you organize your financial life? Comment below, I would love to hear form you..

What are Spending Plan Tools?

worker with tools

Most people are just not motivated by creating or using a spending plan. Research has shown that 20 – 30 percent of the U.S. population does not use a spending plan. According to a survey of over 1000 people, almost a third did not use a spending plan because they felt they did not have enough income. They may have felt like they did not have enough income to use a spending plan, but it’s a good practice to use one anyway, and the spending plan tools below can help you create and manage your spending plan.

What are Spending Plan Tools?

A spending plan tool is simply anything that helps you manage your spending plan. They help you stick to your spending plan and accomplish your goals. Sticking to your spending plan is increasingly important given today’s economic situation.

Additionally, having the right tools is essential when tracking expenses and monitoring income. Luckily, you don’t have to break the bank by buying expensive software or anything like that. From old-school methods to the latest financial applications, there are many tools out there. Below are a few of my favorites.

One of the Oldest is the Envelope System

In the envelope system, you develop your spending plan, cash your check, and distribute your paycheck funds or the funds you created the spending plan for into different envelopes. Next, label envelopes with all your spending categories and put the money into the envelopes. Then you spend the money out of the envelopes for your different spending categories. This method is really good for sticking to your spending plan because when a category or an envelope is empty – it’s empty and there is no more spending in that category unless you make some adjustments to another category.

Spending plans are living and breathing, they change, but an empty envelope is not necessarily a reason to change the spending plan. Perhaps you need to adjust a spending category and spend less in it so you can spend more in another. 

The Spending Plan Calendar as a Spending Plan Tool

This one is my favorites. I am in the process of creating my 2023 spending plan calendars. If you are interested in purchasing one, let me know.

The spending plan calendar is a calendar you use to track your income and expenses by date. To use this tool, pick a day and time during the week. Once a week, and during that time, track your income and expenses in the calendar. The goal is to get into the habit of doing this. I call this working your money. 

Due dates go on the calendar and serve as weekly or monthly reminders to make payments and help to avoid being late. Sharing with your family ensures the family understands the financial priorities of the household. It will also help you feel more in control of your financial life.

Many times, when there are money problems, money going out is the problem, not the money coming in.

There are other tools such as spreadsheets and financial applications you can use to track income and expense categories. Use whatever works best for you. I suggest that you try one or two until you find one that works and helps you start reaching financial goals

Not everyone relishes the idea of proactively managing money and maintaining a spending plan. However, creating a spending plan and sticking to it are key steps toward reaching financial goals large and small. Spending plan tools can help you manage your money better.

Methods and Tips to Help You Track Expenses

There is no short answer to the best method for tracking your expenditures question. The best approach is one you feel comfortable enough to stick to every day and follow through on. Follow the tips and methods below to help you track expenses. 

Track Expenses with Pencil and Paper

If you prefer a tech-free solution for tracking your expenses, write down every penny you spend and where you spent it in a notebook. Simply use one page and note the category next to each expenditure. This may be the method to use if you are new to creating spending plans. This approach can tell you immediately where your money is going and immediately make you aware of your spending.

Using an App or Software to Track Expenses

A modern and perhaps more convenient way to track expenses is in a spreadsheet or a web-based financial app. With online apps or software, you can create colorful graphs and charts to illustrate your spending habits. Both methods allow you to quickly and easily enter your expenditures into a spending category daily.

Work Together as a Couple

If you are in a relationship and have combined finances, you will both need to track your expenses. It’s a good idea to choose an online app or another expense-tracking method that can sync your spending with your spouse’s spending so that you don’t blow your budget.

Smartphone apps for couples allow you to track spending on the go. This can prevent the two of you from spending in the same category at the same time and will give you a sense of how much you have left in a spending category so that you can stick to your spending plan.

Keep Tracking spending Even When You Overspend

When tracking your expenses reveals that you overspent in a few categories, it can be tempting to get frustrated, stop tracking expenses, and start again the following month. However, it’s important to continue to track expenses throughout the month so you can identify what you need to change and by how much.

Once you get into the habit of tracking expenses, it will get easier and take less and less time to complete if you adopt an expense-tracking approach that works best for you and are consistent. Consistency in tracking your expenses will help you to be able to save more, spend less, and make the necessary changes to build wealth and reach your financial goals.

Final Thoughts on Tracking Expenses

At the end of each month, review the expenses you tracked and compare what you spent to what you planned according to your spending plan. If you overspent, look for ways to cut spending and if you spent too little, allocate more to your saving goals or debt repayment.

In either case, you’ll want to use what you learn from tracking expenses to make changes to the spending plan for the next month which will put you in a better financial position.

I dare you to track spending for a month or so. I mean really write down or in some other way, track every penny you spend and where you spend it. Once you do this, you will see places where you can spend less and save more. And you will see where you can change your behavior with money. Contact me if I can help you.

Do You Know Where Your Money is Going?

Do you know where is your money going? Do you know where you are spending every dollar? If I were to ask you how much money you spent last month eating outside of your home, for example, could you give a specific answer?  

If you cannot answer specifically, to the dollar, you could manage money more effectively by knowing where it is going, where it is being spent. 

And once you know, you can make adjustments to your spending and live within your means. And it’s just good to know.

To do this you need to keep track of where you are spending your money. 

How do you keep track of your spending

There are several ways that you can keep track of where you are spending your money. 

A lot of people use debit cards for their expenses and if you are one of them, you could keep the receipts of all your expenses and write them down once a week or so.  You could record everything in your check register as you purchase items. Some banks are now including a place in the check register for writing down debit card transactions.

You could use a financial app to keep track of your transactions or a spreadsheet, or even a piece of paper in a notebook. I currently use an app to track all of my expenses.

Whatever you decide to use, remember, the goal is to track your spending – use something. Try something and see if it works. If it does not work, try something else. 

Remember, you cannot manage your money effectively if you do not know where it is going. 

Knowing where your money is going and the spending plan

Too effectively manage your money, it really helps to have a spending plan. 

In creating a realistic spending plan, the first step is to know where you are spending your money and tracking your spending. After you track your spending, and you get a way or history of how you spent your money last week; last month; last year.  That history helps you develop your spending plan for this week; this month; this year. 

All a spending plan is an estimate of how you are going to spend your money…the better the estimate, the easier it is to stick to it which is critical when working with a spending plan.    

Additionally, in working with a spending plan, once you know and realize that you are spending too much money eating out, for example, you have a starting place to change that habit or behavior and decrease spending.  As you begin to see where your money is being spent and where its going, you will find areas in your spending that you can cut to help you meet your goals.

Final thoughts on knowing where your money is going

knowing where your money is being spent gives you control over your finances and giver you peace of mind about your financial situation.

When you know where your money is going and you are using a spending plan, you are more likely to manage your money better. You are telling your money where to go, and it is going and doing what you want it to do.

It’s working for you and not the other way around. As it should…its your money. Like this post and share this with others that may benefit. Contact me if I can help you create a winning spending plan.

Using Values to Guide Money Management

Today I want to talk a little about using values to guide money management. Values are personal beliefs about what you regard as worthy and true. They tend to reflect your upbringing, and they tend to change very little without conscious effort. Values are the worth of something in terms of the amount for which something can be exchanged. People do what they value.  

Your goals should be based on your values. The more harmonious your values are to your goals with money, the greater the likelihood of attaining them. 

To understand better how you value money, answer this question. If you had an extra $1000, what would you do with it?  Seriously think about this. There are a lot of things you could do, but you decided based on your values. 

Understanding Values

Whatever you decide, it’s your decision, and it’s not about right or wrong.  It’s about your values and your awareness. Understanding your values will help you be a better steward and create a better spending plan.  Remember, people do what they value.

One of the things I ask clients to do is to think about and understand what they value. Because people do what they value, knowing and understanding your core values can help you in all that you do, especially in managing your money.    

Once you a better understanding of your values, you can consciously connect your spending and your spending plan to your values.  And you can create a spending plan that works for you and is easier to stick to. 

Additionally, by understanding your values, you can make goals for your money and your finances that reflect your values, and therefore you have a better chance of reaching your goals and the goals are better. Because your goals reflect your values.  So, instead of buying a big-screen TV with a credit card, maybe you make a goal to save money and buy it with cash because you value the freedom of not paying the interest you will be putting on your credit card. Now you are using values to guide money management. 

Determining Your Core Values

So how do you determine what your values are? Below is a listing of values that can get you started to help you determine your values. 

Ambitious, Caring, Charity, Curious, Dependable, Enthusiastic, Ethical,Flexible, Freedom, Generous, Growth, Happiness, Health, Innovation, Intelligence, Loving, Loyal, Optimistic, Personal development, Popularity,Professionalism, Punctuality, Quality, Recognition, Relationships, Reliability,Safety, Security, Service, Spirituality, Stability, Thankfulness, Traditionalism, Understanding, Wealth, Well-being, Wisdom

If I asked you what you valued, what would you say?

  1. Write down the values that resonate with you.  Add any you think of that are not on the list.
  2. Select the values that you think most accurately describes you and then categorize values into related groups
  3. Once you have related groups of values, identify a central theme of the group.
  4. Next, determine your top core values by ranking your central themes in order of importance.  If you must narrow your list to under 6 to core values.

Values are unique and influenced by upbringing and experiences.

Keep in mind that it’s important to stay conscious of your values throughout your life because, like spending plans, they can change as your career and personal life develops.

Thanks for reading and sharing with others who may benefit. Take care.