In order to get your financial house in order, you must organize your finances.
If you’re anything like me, your life feels out of order, out of whack and maybe even in shambles when it lacks organization.
The funny thing is this isn’t how I’ve always lived my life. I’ve pretty much rebuilt my life and made small changes that have truly improved my life through simple organization strategies.
The same has rang true when it comes to my finances.
Admittedly, in the past I was the type of person who ignored my finances because I didn’t want to know what was going on in my bank account. I had a hard time facing my debt and my credit and I found it a lot easier to ignore it away.
But here’s the problem, it doesn’t go away. And more often than not, ignoring your finances tends to get you in more debt, and more trouble.
Because of this I created a list of items to help you organize your finances.
List your income
The first step to understanding your financial position is to list your income. List any and all sources of income ranging from your 9-5, business, investment and child support.
When listing your income track the dates that you get paid, amounts you get paid and any upcoming changes to your paycheck.
List Expenses
It’s important to know the ins and outs of your spending habits and expenses. In order to do this, you must track your spending over a one to three month period. This will allow you to compare your income to your expenses, evaluate where you are overspending and see where you are falling behind.
This also allows you to evaluate patterns in your spending habits and establish an appropriate budget based on your lifestyle.
List Bills
You’ll want to list out all your bills and the due dates associated with each. You can also list the method of payment and frequency of payments. Listing the frequency can help you be reminded of payments that aren’t monthly.
After listing your bills, create a monthly checklist and update it as you pay your bills. Tracking your bills and making sure you are current on all of your bills will be beneficial to your credit and will decrease late fees.
Organize debt
Understanding your debt details will help you create a plan on tackling them. With each debt, list the interest rate, due dates, creditor information and debt amount.
If you are unsure about all of your debt under federal law you have access to a free credit report. Pull your credit report, review your debt and identify any missing debt from your list.
Budget
Once you determine your bills, expenses and income, you can input this information into a budget template. A budget is a spending plan for your money.
This is different from your expense catalog and can help you create and reach financial goals. Adjustments can be made based on your lifestyle, goals and habits.
Forecasting
To set yourself up for financial success it is best to capture future expected expenses to decrease the number of surprises and unplanned expenses.
Forecasting for the year will allow you to plan adequately and ahead of time. Some things to consider are celebrations, holidays and expected non-monthly bills such as insurance payments.
Net worth
Your net worth is the sum of your assets minus your liabilities. Understanding your net worth allow you to understand your financial health and provides a snapshot of your financial circumstance.
Calculate your savings, investments and debt to determine your net worth.
I’d love to hear from you! Share some of your tips for organizing your finances!
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