Organizing your personal finances

Organizing your personal finances can be time consuming and even a little difficult, but that doesn’t mean it’s something you shouldn’t do. The following are a few tips to help you get your personal finances organized so you can save yourself time, stress, and even money over the course of the year.

Online banking

Set up online banking and learn to use a personal finance program. Personal Finance programs allow you to view all of your accounts including:

  • Everyday bank accounts
  • Loans and mortgages
  • Investment accounts
  • Credit card accounts

By being able to see everything in one place you will be able to take control of your finances and make good decisions based on accurate information.

There are several different personal finance programs available. Quicken is a very popular program for both Windows and Mac, but Quicken for Mac is only compatible with American banks. Mac users in other countries may wish to use iBank. Mint, because it is an online service, can be used on almost any computer or mobile device. However, it is currently only compatible with banks in Canada and the United States.

Track spending

Personal finance programs organize transactions into basic pre-defined categories but may not reflect your actual spending habits. Categories can be renamed or combined and new categories can be added depending on your lifestyle. It may take a few months of examining your transactions to determine the ideal categories for you. It is better to use a few broad topics at the beginning and then become more specific with use. After a few months of using online banking, you may choose to use sub-categories.

Shopping with your debit card instead of cash allows online banking to identify in what stores you shop and will help categorize transactions. You also may choose to keep receipts to enter more information about each transaction. Do not get too detailed. If you routinely purchase groceries and household items, such as garbage bags, laundry detergent and shampoo all at the same time from the same store, consider creating a category called “Groceries, Personal and Household Supplies”. This would encompass everything that is used for your home and the people in it.

Other categories to consider.

  • Financial Charges: Many banks charge extra fees for cheques, using another bank’s automated teller machines, or making payments or withdrawals in a foreign currency. If you track this information, you can easily tell how much you’re paying in extra fees. Check the different types of accounts and banking plans offered by your bank. Switching to a different plan may help you reduce these fees.
  • Interest Expense: It’s a bit of a shock to see how much interest is paid out on loans or bank overdrafts but it may also be the incentive you need to pay off any loans.
  • Charitable Donations: By tracking any donations, you can easily generate a list at the end of the year that will tell you how much you have donated and from which organizations you can expect a tax receipt. It will also be easier to report this information to your country’s tax office.

Simplify bill payments

Reduce the number of bills you have to pay by hand. Sign up for online bill payment services when possible.

If you buy things on credit (a highly debated topic here at Unclutterer), use only one or two major credit cards and cancel store credit cards. Most major credit cards have lower interest rates than store cards and great loyalty programs, including cash-back programs. Remember, just because you pay off a credit card and cut it up doesn’t mean the account is cancelled. Inform the credit card company in writing that you wish to cancel the account. Verify your credit score to ensure that the report indicates the credit card account has been closed as paid in full.

You might consider bundling services where possible to reduce the number of bills you need to pay. By consolidating your various insurance policies with one company, you may be eligible for discounted premiums or other bonuses. Utility companies as well as media/communications companies provide discounts for bundling services like phone, cable, and internet access.

Most utility and insurance companies offer equalized billing. By having a fixed amount to pay every month, it will be much easier to set and maintain a budget. Some companies offer a pre-authorized payment plan where the monthly amount is deducted directly from your bank account.

Manage documents

Designate certain days and times each month to manage your finances. Use this time to pay upcoming bills and update your account balances. You may wish to do your finances every Saturday morning or the first weekday after your payday. Whatever day you decide, write it down in your agenda and stick to the schedule.

If you are using traditional paper billing, keep all necessary items for bill paying in one place. Fill a plastic bin/box with your chequebook, envelopes, stamps, address labels, pen, and calculator. Label the bin “BILL PAYMENTS”. You can even put your bills in the bin as soon as they arrive. Once paid, the paper bills can be stored in a filing cabinet for up to 13 months. Thirteen months is a good timeframe because it allows you to compare the current month’s totals to what they were the previous year — this is nice for things like water bills where you may be able to spot a small leak before it becomes a major one.

If you opt for electronic billing download your bill/statement into a folder on your computer labelled, “Bills to Pay”. Once paid, it can be filed in its appropriate electronic folder. Ideally, the folders on your computer should mimic paper files, e.g. “Utilities – Electric”. Ensure that the bill/statement is in an easily readable format, such as a .pdf file.

Whenever you receive receipts that you can use for your income taxes, such as those for charitable donations, place them in an “Income Tax” file. You won’t need to waste time searching for them come tax time. Many agencies send tax receipts via email so set up a folder on your computer’s hard drive labeled “Income Tax”. Save all electronic copies of income tax slips and receipts to this folder as soon as they arrive.

Organizing financial matters takes some time and energy but you’ll reap the rewards financially and come tax time. With low-cost personal finance programs available, it is easier than ever to track your spending and make better decisions about your financial future.

6 Comments for “Organizing your personal finances”

  1. posted by David P on

    You need a budget:

  2. posted by Kate on

    Another vote for YNAB.

    Also, thanks for the consolidated ideas. I was just going through this myself.

  3. posted by Katie on

    You have some great ideas here about how to save money! Shopping every year or two for car and homeowner’s/renter’s insurance is another way to see if you can save.

    When you are “uncluttering”, also write down all of your account numbers for banks, retirement accounts, stock bokerages, etc, as well as IRAs, insurance policies, and more. Do it bit by bit, and you will have all of your information in one place. This is a wonderful gift to yourself, your heirs and executor!

  4. posted by Liz on

    All great ideas!

    I concur with Katie on creating a binder with key info. It’s easy to grab in case of an emergency and it is helpful with dealing with an estate.

    A few other points to remember ….

    BACKUP YOUR FILES – yes, I was shouting that point. Please backup on several flash drives and periodically store one drive offsite, like in a safety deposit box. Also, consider to print out a copy after taxes are done. Software programs change and data drives crash. You might just need that paper trail for an audit.

    If you are trying to track expenses for budgeting purposes, consider setting up more subcategories to track. Once you have solved the problem, you can combine the categories. Quicken lets you merge categories together, but don’t forget to do that backup right before you make a major change in categories just in case it didn’t go as you hoped.

    Use the memo fields to add more info.

    Quicken has a home inventory program which helps in documenting what you have. You can even list lost of detail such as serial numbers, warranty info, etc. It will help in case of storms, fires, etc. But, of course, store a backup offsite!

  5. posted by Martin on

    Third vote for YNAB. I’ve been using it for nearly two years. It rules them all IMO.

  6. posted by Laetitia on

    For the last 7 or 8 years, my DH and I have recorded *everything* we spend money on, regardless of value. We use a spreadsheet (using Google Docs we can share the spreadsheet so we can both update it). Groceries are just called Groceries in the ‘what’ column and the amount is recorded in the ‘Food / Household needs’ column.

    We like a bit of detail in our recording so, for instance, petrol, car maintenance (servicing, tyres etc.), car registration, car insurance and roadside assistance club membership each have a separate column. Others might like to lump all those things together under ‘transport’ or ‘car’.

    I would say though that, for budget purposes, you are *much* better off using cash for regular purchases that aren’t made on-line or via direct debit / credit. Set yourself a set amount per month or fortnight or week for things like groceries, bus fares and weekly music lessons; withdraw that amount and don’t go back for more if you run out. It will teach you to really assess the wisdom of luxury purchases, hunt out bargains and / or at least pay attention to how much you actually do spend on these things, rather than pulling a figure out of the air.

    And do a budget! It might save you from costly mistakes (e.g. we decided not to get a 2nd car because we realised through our budget that we could afford to buy it but then not afford to keep it on the road) or reassure you that you can afford something (e.g. we decided that I could afford a dog).

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