Seeing as how my mom is here and it always costs a good chunk of change when people come visit, I figured some tips from this article at Life Organizers was very timely!
1. Keep your financial records organized and your filing up to date. Have a set of file folders for items such as receipts, bills, canceled checks, checking account statements, etc. Have a designated place where you keep or can easily assemble your master budget, your financial files, checkbook, etc. so it is all in one convenient location.
This one is an absolute necessity, as when a problem arises or tax time comes, you want to be able to find what you need. We have 3 boxes and a shredder in our home office…one box for “File Away”, one box for “Might Needs for Current Tax Year”, one box for “Receipts” and finally the big shredder…so no one steals my identity!
2. Avoid spending cash, unless you are good at writing down cash expenses in a journal. It is all too easy to get $100 from the ATM and then have no idea where it all went at the end of the week. If you have trouble figuring out where your cash gets spent, keep a small amount of cash on hand for minor purchases. For everything else, try to pay by either a paper check, online checking or through credit cards so you have a record of your purchases. Credit cards are a good way to track purchases unless you have trouble controlling your spending.
Debit cards are really best for those of you having trouble managing where your money goes…you can only spend as much as you have in your account, so if it’s not a lot, then you can’t spend a lot!
3. Give your children a set allowance for things like movies, CDs, snacks and toys instead of just giving them money on as needed basis. Giving children an allowance teaches them to make wise spending choices at an early age. A twelve year old who spends all of his allowance right away on CDs and then doesn’t have enough money to go to the movies with his friends on the weekend has just learned a good lesson on the negative consequences of impulse spending.
Not only do I think kids should get allowances, but I also think that they should be required to put a percentage of it away in a savings account that they cannot use, so they can learn over time the value of saving. The same would go for any cash gifts, a certain percentage should automatically be put away.
4. Have a system in place for handling the mail. If you are not in the habit of misplacing bills or checks, good for you. Keep on using whatever system you have in place now. However, if losing track of bills is an issue at your house, it may help to have a designated mail drop box inside the house. That way checks get put right away in the check folder, bills in the bill folder, etc.
We keep our mail pile in a folder in our office. As soon as the mail comes in the door, the junk goes in the recycling, the magazines go in a holder in the living room, and anything else goes in the office to be dealt with later. This way, we always know where everything is.
5. Avoid going to stores where you have had problems overspending in the past. Our neighbors stopped shopping at warehouse clubs and actually ended up saving money. They found they spent more money by not being able to resist all of the warehouse club bargains on products they really didn’t need than they would by just getting their food at the local grocery store.
Staying out of stores like Target and Wal-mart will save you money too, as there are just too many temptations in all those aisles!
6. Have written, long term savings goals. Some sample goals might be getting out of debt, saving for a college, or building a retirement fund. It helps to avoid spending money on day to day purchases if you have financial goals in mind. Not having any compelling reasons to save makes it easier to fritter away money on small day to day purchases instead of saving for the long term.
It is always good to write down your goals, to create budget spreadsheets, spending worksheets, net worth calculations, etc. Seeing it written down all together instead of trying to view it all on the computer can be very beneficial for those with “multi-tasking” problems!
7. Have a set time each week to review and pay the bills. If you have the money to pay your bills, there is no point in getting unneeded late fees due to disorganization or lost bills. If you make $15 an hour after taxes, then to make up for just one $30 late fee you would have to work an extra two hours to cover the fee.
While I don’t have a set time each week to review and pay my bills, I do use online bill pay so I can schedule all my payments on their due dates. That way, I am never late on a payment! I know some people are afraid of using online banking, but really, give it a shot and see if you like it…try it with just one bill and see how it goes!
So what kind of household budgeting system do you use? Let me know in the comments!