Keeping your finances and household budget organized can help to reduce missed payments, late fees and overspending. An organized household budget can also give you peace of mind and the ability to plan for upcoming expenses. Here are some basic tips to begin organizing your finances and creating a household budget.
Calculate Your Average Monthly Pay
Knowing how much money you earn (or at least an average depending on your occupation), will help you to start to allocate your money each month.
List All Accounts
Next, list all accounts you regularly pay, the dates due, and the average balance of each bill. This can include rent, mortgage, utilities, insurance, recurring expenses to subscription services, etc. It is important to gather it all in one place, so you can see the total average of how much you spend on recurring bills.
Determine Your Money Leftover for Other Expenses
Subtract the average total of your monthly recurring bills from your average monthly pay. The amount remaining is how much you have to budget for other expenses.
List Common Categories of Other Expenses
Make a list of expenses that are not part of your regular bills such as groceries, clothing, fuel and entertainment.
Set Up a Basic Spending Plan
If possible, estimate the average amount you spend each month on these categories of other expenses, or how much you’d like to spend going forward.
Decide What Tools to Use to Keep Track of Your Spending Plan
Schedule a Time to Pay Recurring Bills
Put a time on your calendar (at least once per month) to pay your recurring bills. Use this time to check your account balance as well, so you can notice any accounting errors.
Determine How to Pay Each Bill
The method of paying bills is a personal preference. You can pay many bills by automatic draft, but you must remember to update your balances when you receive the statement. You can also pay bills one at a time online, or write checks to each company. Decide how you want to pay the bills, and set up a system to do so.
Keep Records of Your Bills, Payments and Spending in One Place
You can choose to keep records electronically, in labeled file folders on your computer, and/or keep paper records in labeled file folders in a file cabinet or filing box. It is important to keep these records organized so you know where your money is being spent, and so you can better plan to save for future expenses.
If you live in the Raleigh, North Carolina area and need hands-on financial organizing assistance, I’d love to help you. Please contact me for a free phone consultation to get started.