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..

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.

Three Reasons to Track Expenses

Three Reasons to Track Expenses

Tracking your expenses involves identifying and recording your expenditures throughout a specific period. It’s a crucial and basic activity that should ideally do done every day. 

It may seem like a lot of work to itemize your expenses when you decide to start using a spending plan. However, it’s important to understand why you need to track expenses and how to do so with minimal effort can help you successfully commit to tracking your expenses and becoming more aware of your spending.

Monitoring your expenses holds you accountable for your finances in a few ways. Below are three reasons to track expenses that will help you stay accountable.

It Helps You Stick to Your Spending Plan 

After you set up a spending plan, which is a plan for meeting expenses for a given time frame, tracking expenses is essential to keeping you on the right path with your spending plan and a reason to track expenses.

If you don’t track your money, you won’t know when to stop spending in each category like food for example. It is best to track expenses daily.

Tracking your expenses might reveal that your spending plan has too little for food or neglected to account for one-time or occasional expenses such as holiday spending. When you incorporate these infrequent expenses, you build a more realistic and comprehensive spending plan.

Something that you are more likely to stick with.

A spending plan is a living and breathing document that should evolve over time to suit your family’s needs and goals as they change. Recognizing that you are consistently overspending in one category or underspending in another can help you determine whether you need to make cuts or increases in that category for the next month’s spending plan.

Tracking Your Expenses Reveals Spending Issues

Tracking expenditures will make you more aware of your spending habits. If you don’t know where your money is going, you won’t be able to recognize negative spending habits and behaviors that can more easily be changed, and your money starting to work for you rather than against you.

For example, you might realize that your habit of dining out or buying clothing from expensive brands is causing you to run out of money before the month’s end. Tracking expenses can also help you identify problems in how you manage your money.

It Helps You Reach Your Financial Goals 

It’s not enough to stick to your spending plan if you don’t also make strides toward financial goals. Whether you set a goal to build an emergency fund or pay down debt, you’re more likely to achieve goals if you plan for them.

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

Tips for Reducing Financial Stress

tips for reducing financial stress

If we are honest with ourselves sometimes our financial stress is caused by our expectations not being met. We want things to go one way with our finances and they go the other. Below are some tips for reducing financial stress in your life.

Losing a job, the inability to find full-time work, paying bills on time, and not being able to deal with the increasing costs of living can be disappointing.

When this happens, when our financial reality does not line up with our expectations, we can sometimes become stressed. Try the following tips to help you reduce your financial stress.

Set SMART Financial Goals to Reduce Financial Stress

Goals provide course of action. And financial goals provide direction for your financial matters. They should determine how you spend your time and your money. When setting goals, decide what you want, where you want to be, and what you want your money to do. Further, when you set goals, set goals that are SMART (specific, measurable, achievable, realistic, and have a time constraint).

The best goals are the ones that cause you to “stretch” as you do your best to reach them.

Make Your Time and Money a Priority

Use the “80-20 Rule” originated by Italian economist Vilfredo Pareto. The 80-20 rule says that “80 percent of the reward comes from 20 percent of the effort.” The key to prioritizing is to identify the valuable 20 percent.

Once identified, prioritize your time to work on the items with the greatest reward. If you value managing money well, prioritize the time it takes to manage it well. Knowing where you stand with your finances will help you reduce feelings of stress.

Take Some of the Stress Off and Be Flexible wIth Your Spending

According to Peter Drucker, a management consultant, author, educator, and the described father of modern management, “Doing the right thing is more important than doing things right.” Doing the right thing is effectiveness; doing things right is efficiency.

Be flexible when working on your money, focus first on the urgent, effective task, then concentrate on the important, efficient task.

Reduce Financial Stress by Planning To Spend Your Money

Using time to think and plan is using time wisely. Some would say that if you fail to take time for planning, you are, in effect, planning to fail. Additionally, be consistent with that time. If Monday after work is your money management time, then work your money Mondays after work.

As I have written before, managing money is a job, it takes time, so plan accordingly.

The tips for reducing financial stress above can help you reduce money stress in your life. Be careful with stress as it can cause mental, emotional, and physical health issues. How do you manage financial stress? I would love to hear from you.

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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.