Get into a routine of money management

When it comes to managing money wisely it helps to get into a routine of conducting personal finance activities.  Typically, putting off the reconciliation of your checking account, paying bills, or tracking expenses in your budget leads to more work in the long run and the dreadful over spending of your budget.

If you’re like many people, ignoring financial responsibilities during the week usually catches up to you on the weekends when you have to spend several hours in front of the computer to determine where the money has gone for the week.  Or worse, you neglect money management for more than a week, forget to pay bills and throw in the towel on managing to your budget.  It’s definitely more difficult to piece it all back together at that point.

That’s why it’s a good idea to set aside a certain amount of time for personal finance activity.  So, to get back on track this summer and make managing money wisely the priority it should be, consider the below tips.

Manage money wisely tune – up tips

1. Find a location in your house where you can keep your financial information handy and conduct your work.  If you use a bill organizer and financial file system, keep them near this place so you’re not spending a lot of time digging through piles of paper to find this month’s bills.

2. Pay with cash.  If you’re having trouble keeping up with receipts and transactions families can sometimes generate, consider taking out cash from each paycheck for higher volume spending areas such as food, entertainment and gas.  The only transaction you have to track is the withdrawal.

3.  Save time by considering software to do some of the work for you.  With Mvelopes you can reconcile your checking account and manage your spending categories all in one place.  I’ve used Mvelopes for the past two years to manage our family finances.  It has saved me a lot of time and helped me to stay on top of our spending.

Managing money daily

4. Take 10-15 minutes to record spending within each of your budget categories if you’re using a tracking form or software.  Not sure how to track spending or maintain your budget?  Click here to learn more.

5. Sort through the mail and file bills in your bill organizer so they’re available to you when it’s time to pay them.

Managing money weekly

6. Review financial papers (statements, etc.) received during the week and file them into the appropriate folder in your financial file system.

7. Hold a weekly meeting with your spouse to discuss budget category balances and upcoming expenses to make sure you’re both on the same page.  Talking about money will prevent overspending and help avoid tension related to family finance.

Managing money bi – monthly

8. Pay bills.  If you receive two paychecks, allocate bill payments to each check and pay bills twice during the month.  By following this schedule, you’re avoiding one off trips to your online banking services which take more time.

Managing money monthly

9. Review budget category balances at the end of the month to determine where adjustments need to be made in spending.  Perhaps you’ve over spent in an area and need to manage it closer next month.  Or, adjust your budget for upcoming expenses depending on the time of year.  The seasons definitely impact where you’re spending money.

10.  Create a priority list of upcoming wants and needs.  Review and re prioritize the list each month with your spouse to determine how the top items on the list will be funded.  Getting wants and needs on the list that sometimes aren’t a part of your budget will reduce the temptation to purchase them with a credit card.

Are you in need of a tune – up this summer?  What other tips can you think of to get your money management back on course?

How do you manage and organize all of the financial documents and records for your family? If you’re like most families, it’s difficult to organize bill statements, mortgage statements, account statements, wills, insurance information and more.

Most financial documents end up in a large pile on the home office desk or kitchen table causing us to spend more time looking for the information when it’s needed than would have been taken to file it in the first place. Worse yet, some important records are accidentally thrown away in the garbage.

Financial file system

I thought I would share an excellent financial file system that has worked well for organizing documents and records for our family. David Bach helps you create a FinishRich File Folder System in his book Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner. 

As a side note, this is a good book to help launch better personal money management and learn some essential basics of personal finance.  I particularly like how Bach talks about identifying your financial goals based on your life values.

In the book, Bach identifies several files as a part of his system.  Below are the categories we have chosen to create for our family which you may find helpful.  We have a hanging folder for each category and files within each folder.

Financial file system categories or files

• Tax Returns: Create 7 files to store the last 7 years of tax returns which is how far the IRS can go back for an audit.
• Retirement: Create separate files for 401k, Social Security, IRA’s or other retirement accounts.
• Investments: Create separate files for each investment account or investment. For example, include mutual fund statements in this folder.
• Savings and Checking: Create files for each checking, savings and money market account statements.
• Home: Create files for home owner association statements, home taxes, mortgage statements, security and other areas related to home ownership.
• Credit Cards: Create a file for each credit card account. Keep a copy of each statement to make sure all of your payments have been applied correctly.
• Car Loans and other Liabilities: Create files for each for each car loan and other liabilities.
• Insurance: Create a file for life insurance, health insurance, car insurance, homeowner insurance and any other type of insurance you own.
• Family Will or Trust: You should have a file for all of your legal documents.
• Bills: Create a file for each of your monthly bills statements which do not include liabilities. Examples of these files are electric, house phone, cable/satellite, cell phone bills.
• Medical: Create one file for your medical statements or copies of paid bills.

Believe it or not, it’s still easy to let your financial documents pile up somewhere in the house after you’ve created your financial file system. That’s why I recommend purchasing a portable file that can be kept in a convenient location.

Carve out 30 – 45 minutes to put the system together. Once you’ve created it, it’s just a matter of dropping your documents into each file (a few minutes each day) as you sort through the mail at the end of each day.

What are some other tips for organizing your financial information?

If you use software that downloads transactions from the bank, you still need to stay on top of what is being downloaded to make sure it matches what you actually spent. There have been a few times we’ve noticed what was on our version of the receipt was different from what was actually charged.

Bill and receipt organizer system

A handy tool you can create that doesn’t require much more than a trip to your local office supply store or Target is a bill and receipt organizer system. We purchased an accordion file from Target. Usually you’ll have somewhere from 6 – 10 folders in the file. Here are the labels and uses for each folder we find helpful.

Receipt inbox

The purpose of this folder is used for all spending receipts from the current day or week. They should stay in this folder until they have been tracked in your financial software, checkbook or tracking tool. My wife and I try to add our receipts at the end of the day.

Receipt outbox

Once tracked, they are added to the outbox to be shredded at the end of the month.

Receipts to keep

This folder is for receipts that need to be kept for a longer period of time such as clothing or larger purchases. We don’t want to shred these receipts in case something needs to be returned or we need to keep a receipt for warranty.

Current year taxes

We add all tax receipts for donations, giving, etc. to this folder as we receive them because we know we’ll need them handy when it’s time to file taxes at the end of the year.

Bills inbox

This is where we keep all of our current bills for the month.

Bills outbox

This is where we move bills once paid for file into a longer term file. We usually keep a history of a one year for statements.

For a minimal amount of money you can be up and running with a file system that helps you stay on top of financial paperwork during your busy weeks of family activities and work. I recommend keeping your file in a convenient place for both you and your spouse to easily deposit your receipts each day.

How do you organize your receipts and bills for the month?