Earlier this week, I published a post about the importance of written financial goals. Several readers and commenters agreed that the creation of written goals has been one of the largest contributors toward their financial progress. In reading and responding to their comments, it is clear to me that these commenters have detailed plans and have been able to follow them.
I believe their successful planning and subsequent written goals ultimately stem from possessing an accurate understanding of their financial outlook at all times. Furthermore, written goals often provide the added motivation and accountability needed for that final, persevering push toward achievement.
Organization is Vital
Yesterday, I was having one of those mornings. I found myself in a mad scramble to locate a pair of socks which would fit in with the color family of my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair. Though this simple search only stole a few minutes of my time, it got me thinking about the perils of my own disorganization.
When you do not maintain organization, in all areas but specifically your finances, uncertainty lingers in the air like the smell of rotting garbage; it may not bother you much at first, but if it is ignored, the problems will quickly worsen.
Five Steps You Can Take Today
Much like unsorted laundry, your money is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to be the Superhero that your finances desperately need. You can start by implementing these five easy steps toward decluttering your finances:
1. Automate Your Finances As Much Possible
If you are like me, you value your time just as much as you value money. By automating common expenses, such as mortgage or rent payments, utility bills (such as water, trash, electricity, gas, television/internet, and mobile phone), life insurance and disability monthly premiums, car payments, student loan payments, retirement account contributions, and even savings, you can save yourself significant time, energy, and money. The days of writing countless checks, licking envelopes, and purchasing stamps will be drastically reduced.
Most major banks will allow you to set-up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Lastly, some institutions, particularly student loan servicers, may provide a small APR reduction when you sign-up for auto draft and paperless billing.
Alternatively, you could choose to place these expenses on a credit card each month, leaving yourself with only one condensed bill to be paid. This could be advantageous if you receive rewards.
2. Sign-up for Paperless Billing
When you became an adult, checking the mail each day surely lost its allure. Good news: you can restore fun to the act of walking to the mailbox each day by signing-up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances. Furthermore, with electronic copies housed by your various institutions on secure servers, your information will be protected, you will be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.
3. Sign-up for an Online Budgeting Tool
When it comes to monthly budgeting, I firmly believe everyone should experience working through the fine details with a legal pad or spreadsheet and a calculator. In the interest of decluttering and saving time, however, the average consumer has plenty of online budgeting tools from which to choose.
After utilizing Gazelle Budget for many years, I am currently transitioning over to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solutions. EveryDollar is a very effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular (bi-monthly, quarterly, semi-annual, or annual) expenses.
I also utilize Personal Capital to gather a daily snapshot of all of my accounts and to gauge my current net worth. It is the most simple and effective way to monitor all of your accounts, and furthermore, it will be provide a variety of analyses. The best part? It is free!
4. Use Cash Allowances to Pay for Basic Spending
While EveryDollar can certainly ease the burden of tracking a multitude of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending (or what Mrs. Superhero likes to call her Stitchfix Fund). You can include these cash allowances in your budget with one simple transaction on the first day of the budget month and be finished with the category.
If you are like me and Mrs. Superhero, these categories will represent a large percentage of your monthly expenses. By implementing cash allowances, your will provide an additional layer of accountability to stay on budget (you cannot spend more money when the cash is gone) while simultaneously freeing up additional time each week, which you could allocate toward a side hustle or building your own blog.
5. Eliminate Your Debts as Soon as Possible
For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, retirement accounts, non-retirement investments, and savings toward the purchase of rental properties.
Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. Lastly, you will not experience guilt each month as financial institutions earn interest on your hard-earned income. Trade monthly debt payments for the joy of watching interest work in your favor as soon as possible!
Final Recommendations
If you are willing to dedicate a few hours this weekend, you can implement the above steps to greatly declutter your finances. The sacrifices you make in doing so will pay great dividends, pun partially-intended, for your financial future. After doing so, you will be free to turn your attention from fretting and worrying about your finances and onto creating a game plan and written goals for your future.
Read the full article at: www.financesuperhero.com
Set aside time this holiday weekend to #declutter your #finances to prevent problems & stress down the road.
#moneysmart #familybankgame
