This is the time of year to get your finances organized! That way you can have a plan for the year, and can get ready to prepare your tax returns. This is not an article on how to save money, or where the best place is to invest your fortunes. Before we can think about heading in those directions, we need to know where and what our current finances are. Here are some tips on getting your finances organized.
Where is my Current Money?
Jot down where all of your accounts are and their current balances. These accounts include savings, retirement, trusts, loans, credit cards, mortgages and medical debt. Share this information with your spouse or another responsible family member. Then if something happens to you, someone else knows where your finances stand.
What is my Monthly Income?
When tallying your income, remember to account for dependent care reimbursements, child support, social security, rental income and your income from your job. I like to think about my income after benefits and tax income (the income that is available to live on). This helps to put in prospective what I have to spend.
Make a Plan
Reflect on the last year or the last month. What where your expenses? Be honest. Then you can look forward to what expenses you will have in the coming year. Be honest. If medical expenses were $5,000 last year, will they be similar this year?
Divide Your Money into these Four Categories:
- Fixed –These are the monthly expenses that are probably not going to change. They may include housing, utilities, medical, food, tuition, etc.
- Philanthropy – This is the money you plan to give each month. This can include religious contributions, charitable giving, capital campaign commitments and pop up fundraisers (think neighbor kid raising money for the class trip to Washington DC, or the Scout selling wreaths).
- Future – This is where you plan for your and your family’s future. This may include retirement, savings, college savings, etc.
- Fun – This is the category that we all live for. This could include traveling, movies, sporting events, dinner out, golfing, gym memberships, a photography class, and so on.
Simplify Your Spending
Consider using a cash only system or using one standard credit card for your purchases. This makes tracking your spending (and debt) simplified by having one platform to review your spending. Knowing where all your money is and where your money will go, will help you to get a grasp on getting your money organized. There are great apps available to assist you with budgeting and tracking where your money goes. Mint, Wally and NYAB are popular apps that are user friendly.
Organizing your money will help you to make better decisions when unexpended expenses or fun opportunities are presented to you.
An organizer can help you determine where your money is and detail where your money will go. See if Top Shelf Home Organizing can help you on your journey. Contact Jayme to schedule a consult or chat about organizing.