This post is by our regular contributor, Erin.
Do you have a system in place to organize your money? Or do you just try and wing it every month?
As young adults, it’s easy to think we can get away with leaving our money as is. We don’t typically have too many accounts, and our finances are at a relatively manageable level in our early 20s.
But what happens when you decide to take your money to the next level and begin investing, opening up multiple savings accounts, or buy a home and have more bills to pay?
Remember, all it takes is a little stress, and our financial situation can get out of hand. It’s better to create systems now so we can build upon them later. If you want to learn how to stay organized with your money, read on for some tips!
Why You Need to Get Organized
Paying things as they come in only works for so long. That’s how I began, because the first bill I was responsible for was my cell phone bill. Obviously, that wasn’t hard to keep track of by itself!
However, when I moved out on my own, my responsibilities grew. Keeping track of car insurance, rent, utilities, and quarterly taxes became the norm. That’s not even naming variable expenses.
As you get older, your expenses are likely going to increase in number. I personally get overwhelmed just thinking about all the costs associated with owning a home, not to mention the different types of insurance you’ll need, or all the paperwork you have to gather for an estate plan.
If you’re someone who is a little scatterbrained, short on time, or doesn’t have a whole lot of motivation, you’ll benefit from getting a foundation in place to keep your money organized.
Use a Tool That Works For You
Keeping track of your expenses and budgeting is the first step most people need to take to keep their money organized. You need a framework to go off of! There’s no right or wrong way to go about this, so let’s review a few popular methods that may work for you:
- Spreadsheet: There’s nothing wrong with going the “old-fashioned” route of using pen and paper, or a spreadsheet in Excel or Google Sheets. It’s a low maintenance way to keep track of things, but that does mean you need to be diligent about filling things in. This is the method I went with when I started budgeting more stringently.
- Planner: I used to be really old school when I was in college. Since I was already using my agenda to track class assignments, I also used it to track spending. It was with me all the time so it was a convenient option. Plus, I like paper and pen more than technology at times!
- Cash Envelope Budget: If you’re sticking to spending cash, then this method might work well for you. At the beginning of the month, you determine how much you can spend in each category. Put that amount in an envelope with that category’s name marked on it. You can check the envelopes throughout the month to see how much you have left to spend.
- Apps/Tools: We covered the top 10 personal finance apps and tools here, and there’s no shortage to choose from. You’ll find everything you need in one of these, or you’ll find at least two or three apps that complement each other. If you want a budget program, a simple way to track spending, or an app that reminds you when bills are due, it’s all here.
There are a ton of tools and strategies you can use to stay organized with your money. Use the one that works best for you.
Take Inventory of Your Situation
Before you can organize your money, you have to know what your financial situation looks like.
In general, you need to know how much you’re spending, and how much you’re earning. Subtract your expenses from your income, and see what you have left. If there’s nothing, or a very little amount, you know you have improvements to make. Figure out where you can cut back, or try focusing on earning more.
If you’re in good shape and actually have money left over, then you need to make a plan for it. Are you paying off debt, saving, or investing? Figure out how to allocate your excess money toward your goals.
Set up Automatic Payments
I wrote, in detail, why you should put your finances on autopilot (mindfully!). Simply put, it’s the easiest way to ensure nothing falls through the cracks.
If you have your bills on autopay, then you can be fairly confident the payment will be processed on time. Setting up transfers from your checking to savings account means you’re saving in the background. Automatically transferring money to your retirement savings account helps, too.
As the post states, it’s important to check in every once in a while to make sure things are going according to plan. However, this is a much better alternative than waking up one day and realizing you’re late on a payment, or that you have absolutely nothing saved.
Keep a Document Handy
This is extremely important, especially if you have a family to care for. In the event something happens to you or your significant other, having your money organized will help a lot. You don’t want to have to deal with sorting out logins, passwords, accounts, etc. while in the middle of grieving.
This goes for singles who might be a bit scatterbrained, too. Having a single document listing out where your money is, and what accounts you have, will save you a lot of time and effort down the road. It can be frustrating answering dozens of security questions and jumping through hoops to retrieve your account information.
Obviously, you should keep this document secure – you don’t want random people getting access to your accounts! You can also write it down and lock it in a safe somewhere. Do what works for you, and let your family members know where they can find the information. It’s also a good idea to include instructions (i.e. when you pay things, how payments are scheduled, etc.) so your loved ones aren’t completely lost even with the account information.
What About Debt?
If you have debt with a number of different lenders, it could be worth looking into consolidation. This means you get an entirely new loan with a new lender, and this new lender pays off your old loans. Those old loans are replaced with one large loan from the new lender.
This simplifies your finances and can help you stay organized with your money because you won’t have to keep track of 10 different due dates and balances. Instead, you’ll only have the one loan to stay on top of.
Of course, there are many different factors you need to consider before thinking about consolidation, but I wanted to mention it as it can make a huge difference in how easy it is to manage your money.
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The key with organizing your financial situation is making it easy on yourself. Building a framework and inputting your numbers makes it ten times easier to keep track of everything versus having a bunch of things floating around in your head. Plus, the more organized your money is, the less time it takes to manage!
How do you stay organized with your money? What systems do you have in place? Do you prefer to deal with your money on a whim?
FrugalRules says
We have quite a bit of our finances automated as we’re so busy it makes it much easier to stay on top of. Outside that, I use Personal Capital and an old fashioned spreadsheet to stay on top of everything – it helps me track everything so I can take a simple glance if I want to see where we’re at.
Reelika @Financially Wise On Heels says
I use my own budget plan that I have customized in MS Excel and works great for me. I just have to keep eye on my finances, otherwise I won’t be able to achieve my goals. I’m tracking my investments online as well as it has the analytics already built in.
Beachbudget says
I’m pretty good at organizing most of my day to day stuff, but taxes is a whole other beast. You’d think after 7 years of freelancing I’d have it down, but sadly I don’t. lol!
AbigailP says
I’m an Excel nerd. I map out all of the expenses and allocate extra money into the various accounts. If I have questions during the month, I can just refer to the desktop document.
Hannah UnplannedFinance says
I love excel for breaking down big goals, but nothing beats an app for daily spending. I like Penny Finances or YNAB a lot.
SimplySave says
Some of my favorites are Mint, automating bills and transfers to savings, and using reminders and To Do lists on my phone!
Erin @ Journey to Saving says
FrugalRules I hear you on being busy! Having the option to automate everything is so nice. I don’t think I’d have the patience to write out checks!
Erin @ Journey to Saving says
Reelika @Financially Wise On Heels Nice! It’s great that we have so many all-in-one solutions available. It makes things easier.
Erin @ Journey to Saving says
Beachbudget Ugh, taxes…I definitely don’t have that mastered!
Erin @ Journey to Saving says
AbigailP I normally love spreadsheets, but I just kept falling behind in updating mine when things got hectic. I like the flexibility it gives you, though – I used to do the same (borrowing from one category and reallocating the money).
Erin @ Journey to Saving says
Hannah UnplannedFinance Yes, spreadsheets are definitely great for tracking overall progress. I’ve heard so many good things about YNAB, but the price tag made me shy away considering there’s so many free tools out there.
Erin @ Journey to Saving says
SimplySave I have a lot of reminders set up on my phone *just* in case something fails to go through! It pays to check up on it.
Jason @ The Butler Journal says
I stay organized with my money by using a check register. I also have been using Mint for a year. It definitely has helped me stay on my budget.
houseoftre says
I use my online banking to break my expenses into categories. It let’s you set up a budget too so that you can see how you are doing compared to budget. I used to use Excel, but this is much quicker and easier to track.
Erin @ Journey to Saving says
Jason @ The Butler Journal That’s great to hear, Jason!
Erin @ Journey to Saving says
houseoftre That’s awesome! I’m happy to see more banks integrating useful tools into their interface. It’s nice to have everything in one place.
mycareercrusade says
Loving the posts Erin! I generally use a spreadsheet & goodbudgets as well as a decent Aussie start-up called MoneyBrilliant
Finding that my net wealth, isn’t really tracking in the upwards direction though, it’s probably time to evaluate where the cash is going, likely it’s mostly on holidaying :O ha
Hope you’re well!
Erin @ Journey to Saving says
mycareercrusade Thanks, Jef, hope you’re doing well, too! Hah, oh no – I hope you figure it out. Travel was a pretty big part of my budget this past month.
Laura Beth @ How To Get Rich Slowly says
Another helpful post Erin! I have personally used them all – spreadsheets, the envelope system and the apps. As you point out, it doesn’t really matter which method you use, the important thing is to track your spending and autopilot your finances.
Thanks,
Laura Beth
Andrew LivingRichCheaply says
I need to be more organized. I do automate my bills so I avoid late fees and I get email alerts so I make sure to check my accounts. We’re pretty frugal but I think it would still be helpful to keep track of our spending. And I definitely need to have a document handy because I handle the finances and it would be good so that my wife knows where everything is if need be.
Harmony@CreatingMyKaleidoscope says
We recently consolidated a large portion of our credit card debt. It does make things a lot easier and lowers our interest rate. One word of caution – this is our second consolidation. You have to be ready to change your ways in order to benefit from consolidation. Otherwise, you end up with newly-available credit limits and can dig yourself in even deeper.
Erin @ Journey to Saving says
Laura Beth @ How To Get Rich Slowly Yes! It’s great to have so many methods available to us these days. You can’t really go wrong as long as you have the motivation.
Erin @ Journey to Saving says
Andrew LivingRichCheaply It’s always a good idea to have a master list for your family to take over the finances. It doesn’t even have to be in the case of something bad happening, but if one spouse has to travel for an extended period of time at a moment’s notice, it can throw everything off! Best to be prepared.
Erin @ Journey to Saving says
Harmony@CreatingMyKaleidoscope Yes, definitely agree with that! Consolidation isn’t just an easy fix, you have to be committed to pay off your debt. It’s not a solution I’d recommend freely.