Money Smarts Blog

Getting your finances in order is something we all mean to do, but it can easily fall by the wayside as life gets busier. However, money is consistently identified as one of life’s worst stressors for basically everyone (including me), so taking a little time to organize your finances could make a world of difference.

Here are some basic steps you can take to get organized and start managing your finances better for your future.

1. Create a Monthly Budget
This is the easiest first step you can take toward organizing your finances. Pull out some of your recent pay stubs, gather your monthly bills, and start to map out when you’ll receive paychecks throughout the month and when each bill is due.

Once you’ve forecasted what your leftover income will be after bills, budget for some fun stuff, like going out to eat or a few coffee stops, and decide how much you’d like to put away into savings.

Something to think about: For you, the amount leftover after bills may be miniscule. I’ve been there. You might feel a bit discouraged, but try to fight through that feeling because any little bit you can put in your savings for a rainy day or when something needs to be fixed will help you in the future. There are lots of methods for saving that can help you build a savings account in a relatively short amount of time, so do some research into which method might work for you and your budget.

2. Regularly Consult Your Budget
Watch for unexpected expenses and bills that are higher than usual. If either of those happens, you can adjust your budget to make up for it. For instance, if you have to get your tire patched for $30 because you ran over a nail, and you were going to put $50 in your savings that month, simply adjust the budget to reflect only $20 being saved.

If you have a bill that’s more expensive than usual, try to identify why it was higher than normal and use what you find to help better prepare in the future. Let’s say your energy bill is higher in July than it was in June and you realize it’s because you used the air conditioner more because it was hotter outside. You can make a note in your budget to expect higher energy bills in the warmer months. This way you accurately budget for that bill.

3. Know Your Due Dates
When you list your monthly bills in your budget, make sure to identify when your statement is sent to you via email or snail mail, and when each bill is due. Consider the day you receive your statement as the bill due date, and the “pay by” date as the absolute last chance you’ll get to submit payment without being penalized.

This way of organizing bill payments throughout the month will help you avoid late payment charges or forgetting to pay a bill altogether.

4. Only Spend Money You Have in Your Checking Account
A good habit to get into is only spending money you have in your checking account. It doesn’t help you at all to spend money you don’t have, then try to pay down a credit card balance later. Check your account balance (and transfer money from your savings, if necessary) before shopping and paying bills so you know you have enough cash to cover whatever you’re paying for.

It’s slightly annoying when you first start doing this because you have to actively think about whether or not you have the cash for a purchase, but it gets easier (said from experience).

Side note: If you have a big purchase that you’d like to put on a credit card for airline points, cash back, or other credit card perks, do so when you have the cash on hand to pay the card back as soon as possible.

5. Be Realistic with Your Savings
Building your savings account will likely consist of a series of baby steps, especially if you can’t save a lot of money each month. You’ll need to identify how much money you want to save, then pick a realistic time frame to achieve that goal.

The key term here is “realistic”. Don’t put unnecessary pressure on yourself to have an excessively large amount of money saved within a year if you only have $100 left after bills each month.

6. Cut Unnecessary Costs
Once you have your budget established and have a better understanding of how you spend each month, take a look at the things you spend money on and decide if you can cut back or eliminate that expense altogether.

For instance, my husband and I used to pay for a traditional 2 year contract phone plan, which was pricey for us. When our contracts were up two years ago, we decided to keep our phones that we had from our plan (which were fully paid off after that contract) and try pre-paid plans. Not only did we continue to have the same perks as before, but we started paying half of what we were previously paying.

Consider what you might be paying too much for and brainstorm ways to cut back (like signing up for pre-paid phone plans) then put the extra money you have each money into your savings account.

These are pretty basic steps to take to get the financial organization process started, but there are many more advanced steps you can take as you become savvier at managing your personal finances.

If you’re at the point in your financial journey where you’d like to feel less stress about money, budgeting, and saving, IHMVCU’s got your back. As a member, you’ll receive assistance and guidance with all the above steps and more. IHMVCU wants to support you as you hit all your financial goals, so call or stop in today to start organizing your finances and improving your financial health.