How to organize your finances

Every year, spring cleaning offers the opportunity to tackle big projects you’ve been putting off, and that can include decluttering your finances. Whether you’re preparing for extra expenses, like summer trips, or just want to feel more confident with your money in general, now is a great time to assess your financial life and make sure your efforts are on point. to your advantage.

Much like cleaning out a crowded storage closet, tackling your personal finances can be daunting, especially if you’ve been avoiding it for a while. But experts Rachel Cruze, best-selling author and personal finance expert from Ramsey Solutions, and Laurie Adams, Certified Financial Planner from Country Financial, share simple ways to clean up three important aspects of your financial life: budgets, goals, savings and insurance coverage. Follow the steps below to organize your finances and create an accessible plan that works for you.

Stick to a budget

Knowing your current financial situation is the first step to organizing your finances. Cruze says making a budget (if you don’t already have one) is the best place to start. “Think of a budget like spring cleaning: it’s a great way to organize things around the house, and you’ll feel a huge relief once you’ve done it,” she explains. “I know a lot of people think of the word ‘budget’ like a negative thing, but it’s not. A budget does not limit your freedom. He gives you the freedom to do more of what you want to do.”

Start tracking your money to identify where it comes from (income) and where it goes (expenses). Try free budgeting and money tracking apps that make this process easier. Many have features tied to your bank account or credit card, quickly categorizing what you’ve spent, repayment due dates, and upcoming deposits. To create a realistic budget, follow these steps:

  • Create a plan: The most common rule of thumb is the 50/30/20 rule: 50% of your net income is spent on needs, 30% on wants, and 20% on savings, investments, or debt repayment. Other popular budget plans are the zero-based budget or the 70/20/20 budget. The best budget is one you can stick to, so pick the one that’s right for you and commit to using it.
  • Choose a budgeting tool: Don’t go alone. Managing every dollar in and out can be cumbersome. Instead, use an app, simple spreadsheet, or cash envelopes to organize your allowances and track actual spending during the month.
  • Track budget and actuals: This part requires defining categories and assigning numbers. For example, rent is $1,500, groceries are $500, and so on. But just writing down what you intend to spend is not enough. At the end of the month, you will need to write down what you actually spent. These actual numbers should form the basis of your budget for next month. If you spend less, you could carry over those savings. And if you’ve overspent, you may need to find another expense to cut.
  • Find a responsible partner: How do you hold yourself accountable? Share your budget with a friend or family member who will check in on your progress from time to time. Automating savings and bill payments is also another way to stay on track.

When it comes to budgeting for debt repayment, Cruze recommends setting a goal of paying off one debt at a time using the debt snowball method. “By paying off the smallest debt first, you’ll gain confidence with each win and use that motivation to keep the momentum going,” she explains.

Whichever budgeting method you choose now, it’s important to remember that your financial situation is not static. It will continue to change as you reach your goals, pay off debts, or gain additional sources of income. At least once a season, be prepared to review your goals and make sure your budget reflects those changes.

Set a savings goal

Savings allow you to meet your financial obligations and build wealth. Whether you’re saving for retirement, an emergency fund, or investing in a mortgage, stocks, and mutual funds, it’s best to build your savings plan around SMART (specific, measurable, attainable) goals. , relevant and time-limited).

  • Implement SMART goals: For example, if you want to save $50,000 over the next two years to put down a down payment on an investment property, you would need to set aside about $2,083 per month. This amount can be incorporated into your budget so that you know how to channel any savings or additional income that arises during this time. If you stay focused, you might even reach your goal much faster than expected. To help you calculate how much you need to save to reach your specific goals, you can use a savings goal calculator, like this one from NerdWallet, which takes into account the amount of money you want to save, the amount you you have already saved, the time you need to save and the annual interest rate.
  • Choose the right tools: Consistent backup is difficult if you don’t use the right tools. Automated savings is helpful. Look for interest-bearing savings accounts, no-fee accounts, mutual funds, certificates of deposit, and even investment accounts that reward you for your savings and preserve your purchasing power.


Review your insurance coverage

Insurance helps protect your assets, but very few people review their policies to make sure the coverage is right for their current situation. According to Adams, spring is the perfect time to review insurance policies. Start by reviewing the previous terms and updating your policy and beneficiaries to meet your current needs. Next, Adams says to notify your agent or financial representative to report changes, including:

  • New purchases or gifts: Tell your agent if you have received valuable gifts, such as jewelry, or made high-value purchases, such as jewelry, computers, or even artwork. You may need to get an appraisal to assess their full replacement value.
  • Property improvements: Many home insurance policies require you to tell your agent if you are making changes or improvements worth more than $5,000.
  • Change of beneficiaries: Life happens. Marriages, divorces, deaths and births can all mean that you would like to see a change of beneficiaries. Review existing policies to increase or decrease coverage and ensure that all future payments will go to the correct person or bank accounts.
  • Change of address or contact details: Likewise, telephone numbers, e-mail addresses, workplaces and even home addresses change periodically. Make sure your banks and insurance companies have the most up-to-date way to reach you.

In the midst of a busy life, it’s easy to lose sight of finances that aren’t immediately urgent, but taking the time to reassess your budget, goals, and coverage can help you live with more clarity in the present and more security in the future.

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