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9 Best Steps to Organize Your Finances

  April 18, 2019  |    #Eliminate Debt

Organize your finances now!

What if you could organize your finances easily and simply? Would you do it? Well – good news! – it is, and here’s the easiest way.

Get more below, though.

Can’t it just be easier? Yes

Travel. Traffic. Keeping track of characters on Game of Thrones. Taxes.

These, like many things in life, could all be easier. You know one thing that’s already easier? How you organize your finances.

Once upon a time, we wouldn’t have agreed with that last statement let alone make it. But we’ve now seen the light (after a long, long time in the darkness).

There were many parts of our financial lives that were messes – that’s no secret. What’s always stuck in my memory is the pile of mail on our counter. It just grew and grew and grew.

In that pile, we always knew there are important things to look at, respond to and do. It was a mess that would make Marie Kondo sad.

It wasn’t just the mess that caused the stress, though. Part of why that pile piled up was because we knew that mess of mail had a mess of information about our financial mess.

You see, we weren’t financially organized – at all. We had late statements, bills, past due notices and fees. It felt like every piece of mail was just another reminder that we were doing it all wrong.

Who wants to be reminded of that several times a week? We didn’t, and the pile grew a week’s worth of mail taller.

Am I alone in not being financially organized? No

For the longest time, we thought it was just us. Everyone else in our lives seemed to have their stuff together, but it turns out that’s not true.

Prudential’s 2018 Financial Wellness Census shows that 50% of LGBTQ people don’t have a single banking product – not a single one including either a checking or savings account. It’s impossible to organize your finances without using the tools to be organized with your money.

This lack of organization then gets expensive. Check cashing services and Pay Day loans are way more expensive than using a checking account at a bank. Emergencies are already expensive, then adding 15% to 22% interest on top of their original cost because you covered it using your credit card makes the emergency worse.

The cycle continues, and it continues to get harder.

Then, it’s way harder than it needs to be. Don’t make it harder than it needs to be.

Can I do what it takes to get organized financially? Yes

There are some basics that we can all – like everyone – use to organize your finances. Below are nine.

1. Open and use two checking accounts and one savings account

Either online – the easiest option – or at your neighborhood bank, open two checking and savings account. You can open these accounts online as quickly as you created your Instagram account and the benefits are more rewarding.

For one checking account, only get Bill Pay. For your second checking account, get checking writing, Bill Pay and a debit card on your checking account.

Next, set up a Direct Deposit from your employer into each of these three accounts. For your first checking account, the account that only has Bill Pay, Direct Deposit enough money into this account to cover all your fixed expenses each month. Fixed expenses include rent or mortgage, auto payments and WiFi. Then, set up the Bill Pay in this account to automatically pay these fixed expenses each month.

Set up your Direct Deposit into your second checking account, the one with all the features, to cover your fluctuating monthly expenses. These include heat, water, groceries and social spending.

Finally, Direct Deposit any extra money from your paycheck into your savings account and let that accumulate. In time, you’ll save more money than you can believe.

2. Send it before you spend it

One of the biggest challenges with organizing your finances is paying bills on time and in full each month. Not doing so hurts your credit score, too!

Pay all your bills as soon as you get your paycheck, even before your bills are due. You can even call your service providers, cable, phone and otherwise, and have them shift your payment dates to align with your pay cycle.

3. Use a budget

It’s simply impossible to organize your finances without a budget. A good budget, one you’ll stick with, will accommodate your lifestyle and needs. It shouldn’t feel like a diet. It should feel like success.

A budget should feel like success? YES!

At least monthly, you should be able to look at your accounts, the checking and savings accounts above, your emergency saving and investing accounts, and feel like you’re making progress. It should feel like all the work is worth it.

That’s why finding the right budget is so important.

4. Use cash and the envelope system

Cash is still king, and nothing beats the envelope system. We honestly think that today’s modern conveniences have made it harder to manage money. We’ve never been more disconnected from a transaction that we are today.

Don’t believe us? Try it. Next time you go shopping, pay for one transaction with cash and another with a card or phone and tell us you don’t have different, visceral feelings about each.

Paying with cash creates a different level of awareness, which is one reason why cash is king. To make using cash easier, use the envelope system to keep your cash organized. We still use the envelope system for our gas, grocery and social spending.

Our social spending, for example, can mean a $1.50 charge here, a $25 charge there and a $15.81 charge over there. Balancing our checking account after a series of expenses like these is a nightmare and we usually make a mistake somewhere.

This lack of financial organization typically means defaulting to our credit cards, which is everything we’re against.

5. Use financial software

No fancy Excel spreadsheet can beat today’s fancy apps. As frequent readers know, we’re fans of the Honeyfi app for our day-to-day budgeting. We’ve also used and like Mint.

There are both good tools for personal budgeting. For our business, we’ve started using and like QuickBooks.

While we use financial software to help us with our day-to-day budgeting, we’ll always hold our Excel spreadsheet near and dear to our hearts because most financial software isn’t as detailed as we prefer.

6. Go paperless

Manage your bills, don’t let them manage you. This has never been easier to do than it is today. When setting up Bill Pay on your two checking accounts, you’ll probably be asked if you want to receive future bills electronically. Your answer is “Yes!”

Set up a unique email address for your bills, then when you set up Bill Pay and choose to receive future bills electronically, have those electronic bills go to your special email address. Within this email account, create folders for each of your bills, i.e., ‘Heat,’ ‘Mortgage,’ ‘Student Loans,’ etc.

For the few bills that you can’t set up to receive electronically, file them in the same place in your house as soon as you receive them and double check your next Bill Pay, will be sent on time and in full.

Go paperless with your checking, savings and investment accounts, as well. These can be stored in separate folders in your new email account.

Putting all documents in an email folder isn’t necessarily the best way to organize your finances. Some documents, such as trusts and estate documents, will, etc., are better electronically archived with financial tools such as DocuBank and LifeLink.

These tools electronically store official and legal documents, including healthcare directives, emergency medical information and marriage licenses to make them easily accessible from anywhere in the world when you need them.

7. Perform a regular review

It may seem like once you’re done setting up this system, that you can just forget about everything.

Wrong.

It’s still important to make sure everything’s functioning properly. Make sure your Bill Pay amounts will cover all your bills adequately. Make sure everything is scheduled to be sent on time – this is why sending it before spending it is helpful.

You’ll also want to double check that you receive the right about of pay and that your direct deposits are being divided correctly into each of your accounts, your two checking and one savings account.

8. Request and review your credit reports

A leading financial concern of LGBTQ people – and a great barometer of your financial organization – is your credit report. Once a year, go to FreeCreditReport.com and asked for your three, free copies of your credit report.

In a few days, you should receive your credit reports from Experian, Equifax and TransUnion. Once you receive them, review each thoroughly for accuracy. If you notice any errors or stale information on your report, contact the generator of the report directly to have them update their records. Then, ask them to mail you an updated report for your records.

9. Purge and save

Most of us have piles or draws full of paper because we don’t know what to keep and what to throw away. Create a process to regularly purge and save and you’ll never organize your finances better.

Any bills or statements that you can’t go paperless with, store in a folder for one year. After that, they should be destroyed. If you happen to need these documents after they’ve been destroyed, you can always get them from the issuer.

Forms, such as tax returns, insurance policies, deeds, trust and estate documents, should be archived. Tax returns should be kept for a minimum of seven years. Saving all tax forms for the same year in a folder noted for that year is easiest.

Yes, at some point, all adults need a little filing drawer or cabinet.

BONUS: Is there help to organize your finances? Absolutely

We’re always looking for ways to simplify our lives. How many times have you looked for an app for “that?” Whether for travel or traffic or any number of frustrations, we’re always looking for something to make it – and thus life – easier.

That’s why we created the 13-Week Leap. The 13-Week Leap will walk you through one, single step each week over 13 weeks to organize your finances. We’ve broken these down to the simple steps to take to be as easy as they can be to help you get organized financially.

In 13 weeks, you’ll take the 13 necessary steps to:

  1. Set up a checking and savings plan that’ll make it easier than ever to pay your bills
  2. Start improving your credit score
  3. Get on a plan to have $500 in emergency savings within one year

If you’re constantly stressed about your money, with paying your bills and with having another unexpected expense, sign up for the 13-Week Leap today. 13 weeks from now you’ll wish you would have.

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