A lack of organization can harm your finances as much as being short on cash. Losing bills will lead to late fees, and not keeping track of your checking account balance can lead to overdraft fees. The following steps will help you stay on top of your financial life and save you money in the long run.
Review Your Budget Monthly
Even regular bills can change from month to month. Revise your budget as the bills come in and adjust other expenses to make up for it so that you don't accidentally overdraw your bank account.
- Even routine expenses like utility bills go up or down from month to month. Keep track of them and adjust your discretionary spending accordingly.
- Keep a checklist of monthly bills to avoid unpleasant surprises.
- Coordinate day-to-day spending with significant others.
Some months bring higher electrical bills than others. Your electricity bill could be $100 more in June than it was in May. Your budget needs to reflect that higher expense. Review it to see what other expenses you can adjust so you can pay your electric bill.
And remember, July is going to be hotter than June, so your revised budget will be more realistic going forward.
Adjust as Needed
To save $100, you might exchange two dinners out for a bike ride with a packed lunch. Or, dial down a budgeted night out and go to a free concert in the park instead of a pricey restaurant.
Basic budgeting apps can be found online for free.
The best part about having to cut down on one expense to pay for another is that it will force you to break tradition and try something new.
What if you don't have a budget? Create one today. Start by writing down your expenses the way you expect them to unfold. At the end of the month, tweak the budget by recording your real expenses.
That process alone could surprise you and suggest ways you can use your money smarter.
Use a Financial App
Financial software isn't just for investing. Free basic budgeting apps are available online that can help you keep track of daily and household expenses.
When choosing a budgeting app, check the app store ratings or verify on the Better Business Bureau website that the one you're considering has a good track record with customers.
Keep Bills in One Place
Even if most of your bills arrive electronically, you still need a place for those that come by mail. And yes, some still do. Property tax and homeowners' insurance bills typically are paid on an annual or quarterly basis, so they generally arrive by mail. An occasional expense like a medical test may be billed the old-fashioned way.
Keep the bills near your desk or wherever you normally write checks or pay bills online. A simple file cabinet or a couple of folders will do the job.
Now that most people take care of bills online, it's common to shred any paper statements that arrive and rely on online records. If you prefer to keep paper records for tax purposes or just for security, file them in the filing system you just bought or scan them for storage in an online filing system.
Pay Bills the Day You Get Them
If you have money available in your bank account and you don't have other debit card or bill pay charges coming through that could cause an overdraft, pay your bills as soon as you get them.
Pay attention to paper bills that you usually pay electronically. You don't want to pay a bill twice because you got a duplicate by mail. Always call the creditor when a paper bill arrives if you think you have an automatic payment scheduled or electronic billing set up.
Use a Checklist for Bills You're Expecting
Neither mail nor email is perfect. Create a checklist at the beginning of the month listing every bill you are expecting. You can keep it on your desk, bill-paying area or a file on your computer.
Coordinate with Significant Others
If you share expenses with a spouse or significant other, you can easily bounce a check or debit card payment if you don't know how much the other has been spending.
Say your spouse has the day off and decides to have lunch and go golfing with a buddy. When you get home, you hear about a great game of golf. What you don't hear is that it cost $150 and your direct-debited student loan payment is about to bounce.
Verify that Your Paycheck is Direct Deposited
If you have direct deposit you get used to your paycheck being there on paydays. However, electronic payments aren't always recorded on the expected date. Don't spend your paycheck without confirming that it's there.
Use Two Bank Accounts
Use one account for discretionary spending and saving, and the other for paying bills. That will prevent you from accidentally spending the rent money on a night out.
Missing bill payments because of a lack of organization is the easiest financial problem to fix. You don't have to follow all eight of these tips, but make sure you have an organizational system that you can stick to every month.