Organize Your Financial Life: Planning and Automating
It’s a new year and we all have a busy life. So why not start the year off right by getting your financial information organized and in order? Managing your finances may not be the most fun thing to do, but avoiding it can cause you stress and create problems if minor financial issues are left unattended. Taking some time now to tidy up a few things will save you time (and maybe money) throughout the year.
Let’s start with a big picture view. Pull out a calendar and think about your year ahead. Will it be a normal year (what’s normal anymore!) or do you have some extra things you need to consider? These could be special life events (getting married, having a child), planning a vacation, moving, large purchases (car, home furnishings, a house), paying down debt, etc. Also, think about how you want to spend your money. You earned it, so you should decide. Jot these things down along with any estimated dates and costs then set them aside.
Next, look at your monthly financial ins and outs to see how your cash flow is working (if you have your information on BrightDime, you can look at your cash flow summary or budget page).
Income: write down how often do you get paid (weekly, biweekly, monthly) and the “take home” amount along with any other income and the timing.
Spending: make a list of all your ongoing bills, their due dates, frequency (monthly, quarterly, annual etc) and estimated amount. Include items like mortgage, rent, car payment, utilities, insurances, phone bill, credit card, online subscriptions, memberships, etc. (While you’re listing these, be sure to check for any extra fees being charged, services or coverage you no longer use and cancel what you don’t need).
Now, compare income and expense. How does your pay cycle match up with your bill due dates? If you notice that one payday has more obligations than another, contact your lenders and other service companies and move some dates to balance things out (yes, you can do that!). They’re usually happy to oblige to ensure they get paid on time. And speaking of getting paid on time…setting up automatic payments is a great way to get better organized, make sure you always pay your bills on time and avoid any late fees (not to mention freeing up some of your time). You can do this with your credit or debit card, using your bank’s online bill pay service or automated debits from your checking account. Your pay is most likely automatically deposited so why not automate your bills? When setting these up, you should schedule them several days before the due date as it takes a few days to the transaction to occur. It’s also a good idea to keep track of the payments you have automated. If you move or something else changes you’ll need to stop or change them or update the payment information if your credit cards or bank accounts change. If you have some you prefer not to automate, add calendar reminders to your phone (again, several days before the due date) to ensure they are paid on time.
Now, that you have your ongoing obligations cleaned up and set, let’s circle back to those extra things you need to cover and how you want to spend your money in 2019. Turn each of these into a SMART goal, prioritize which ones you plan to tackle first then put an action plan in place to automate what you need to save each pay cycle or month. Some employers will allow you to send your paycheck to multiple accounts, such as a checking and savings. If that’s not an option, you can set up automatic transfers from your checking to a savings account either monthly or each time you are paid. If there’s not enough left over each month to cover these, go back and take a closer look at your monthly ins and outs. Any way to increase income or decrease expenses? By thinking through and planning for these now, it may keep you from incurring high interest debt later on. Remember, it’s your money, so take charge of it.