Have you been struggling to organise your finances? It is really easy to let our spendings get out of hand if we don’t take a few moments every now and again to review our current financial situation and evaluate what we are spending our money on. This article covers my top tips to help you organise your finances in just a few spare hours.
Review your spendings
The first step when trying to organise your finances is to review your current financial situation. If you don’t know where you’re spending too much then you won’t know what to cut down on. I recommend looking over your spendings from the last month and evaluating which expenses are necessities and which are wants. There are several different ways you can track your spendings and see where your money is going.
To track your spendings manually you want to either check your bank statements (if paying by card) or receipts if you’ve kept them and separate all of your spendings into different categories ie. groceries, bills, subscriptions, entertainment, savings etc.
Spending tracking app
Another way to easily track your spending without taking a lot of time is to use a money tracking app. Not everyone feels comfortable inputting their bank details into an app however there are several trusted apps that let you connect your bank accounts on a read-only connection. These apps then categorise your spendings for you making them much more convenient than manual tracking. I used to use OnTrees before they shut down but now I have found Money Dashboard where you can see all of your accounts in one place and it sorts your spending into different tags.
Unfortunately, with Money Dashboard it takes a few days for your transactions to show so you won’t be able to benefit from it right away but it’s a good website to sign up for to keep track of your spendings in the future.
Once you have listed and categorised all of your spendings you need to sort these categories into needs and wants, i.e. necessities that you have to pay for every month like rent, bills and groceries versus things you want to buy but don’t need like clothing and eating out.
By identifying the things that you buy that aren’t necessities, you get an idea of where you might be able to save money in the future.
Where would you like to be financially? Debt-free? Financially independent? One key thing to do when you organise your finances is to take time to sit down and write out your financial goals. Try to be as specific as possible with this. You can choose to make a list, create a Pinterest board with motivational quotes or draw out a mind map. Just make sure that whatever method you choose to write out your goals works for you.
Choose 1-3 goals
Prioritise your goals and choose 1-3 to focus on right now. If you have too many different goals at one time then it can easily become overwhelming. Instead just choose one or a few to try to reach right now. Don’t worry, you will have time for the rest at a later time.
Set emotional goals
While you are thinking about your goals, try not to just think about what you can do with more money but also the emotional relief and happiness that comes with being more financially stable. If your goal is to be debt-free think about how that would feel and try to describe that feeling. If your goal is to set up an emergency savings account think about the security you would feel in having that backup money.
Evaluate your subscriptions
Once in a while all of us end up subscribing to a service that we end up not using. These subscriptions can be very damaging to your personal finances and goals because unless you track all of your spendings, they can easily slip by unnoticed. Follow these steps to avoid losing more money that you could find a better use for.
1. Identify all of your subscriptions
Log onto your bank and scroll through all of the transactions from the past month. Write down all of the ones that are monthly subscriptions, i.e. Netflix, Spotify, premium memberships.
2. Evaluate each subscription
Go through each of these subscriptions and ask these questions: Do I use it regularly? Is there a free alternative that offers the same thing? Is the value worth the cost? Remember that these costs add up over time. “Only” £10 a month may not sound like a lot but it’s £120 a year that could go on something more useful.
3. Unsubscribe now
Once you have decided on a few that you don’t need unsubscribe from them now! It may be a bit tricky to find out how to do this because companies intentionally make it difficult to cancel memberships but spending just a few minutes now may save your hundreds this year.
Create a budget
Next, it’s time to create your budget. Although you might have struggled to stick to budgets in the past, creating a budget is the number one step to help you organise your finances. Budgets allow you to keep track of exactly how much you can spend on different expenses every month without accumulating debt. Follow the steps below to create a simple budget for your household.
Firstly, write down your total monthly income after taxes. Remember to include all income sources including additional income like babysitting.
2. Fixed expenses
Next, make a list of all of your fixed expenses or in other words your necessities. This includes things like rent, bills and groceries for the month.
Every month you want to put money towards your savings. Many people suggest setting aside 10-20% of your total income into savings. If you feel like that is too much at the time, you can start lower and increase your monthly savings from there. The important thing is that you decide on this amount before deciding on your other expenses and that you transfer this money into a separate account.
4. Other expenses
Now that you have covered your necessary costs and savings you can choose to delegate the remaining money however you wish. This could be entertainment, eating out or clothing. Just remember to keep your goals in mind when you are budgeting. Maybe some of the remaining money could also be put towards your savings or paying off debt?
Budgets are never fixed and are bound to change as your needs change. Before the end of this month, review your budget and consider what worked and what didn’t. You may discover extra expenses over the month that you hadn’t thought about. This is okay, just write it down so that it is in your next budget.
Organise your finances with these bonus tips!
Earn extra money
Are you struggling to find money for your savings or to pay off your debts? Try to find an extra source of income that you can work on in your spare time. There is a huge range of potential jobs to fit your family and lifestyle. For more time-consuming but rewarding jobs you could for example drive for Uber or start your own blog or if you’re just looking for something more easy and less demanding you could sign up for survey websites. Every little bit helps.
Try a no-spend challenge
If you spend a lot of time on Pinterest you will probably have heard about no-spend challenges. These are challenges where you go without spending any money, apart from necessities, for a set amount of time. The most common time period is a month but I’ve also seen people do this for a week. If you feel like you have a problem with spending too much money on things you don’t need, try a no-spend challenge to get used to buying less and making do with just necessities. This will help you save up some money to put towards your financial goals.
If you need ideas for free things to do in your spare time check out my post about frugal summer activities for adults.
Those are my top tips to help you organise your finances! What are your top personal finance tips? Let me know in the comments below. Thank you for reading! xxx