Once, a friend of mine told me that no matter how much money he had, he always ended up spending 20% more than that. Sticking to a savings plan can be a challenge for many, and some of us have more trouble than others. If you are the kind of person who is not naturally organized, or if you find yourself struggling to pay bills, you might benefit from some pointers on how to improve your budgeting habits.
Whether you are striving to make ends meet or working hard toward a savings goal, there are some basic principles when it comes to budgeting. Financial success for both newbies and experts requires the same skill set. We all need to commit to budget goals, organize, gather appropriate materials, and practice good financial habits regularly. Start with the simple goal of paying bills on time. Work toward building a spending plan that leaves enough funds, after paying bills, to save. Then, set savings goals, start saving, and review your progress.
A couple of months ago, I posted a series of articles called “Working on Your Finances?”, covering some basic personal finance habits and strategies. I tried to take my own advice, but let’s just say that sometimes advice is easier to give than to follow. Without judging, let’s revisit what it takes to improve our financial habits. We’ll call it spring cleaning.
Spring Clean – Record Keeping
One of the best ways to shake up your routine and increase your motivation is to spring clean, or take out the trash! With budgeting, you will be opening and sorting mail, writing checks, balancing your check book, reviewing bank statements and saving important records. You will also throw out a lot of extra paperwork you don’t need. So when you work on your finances, you will need to manage the amount of paper you produce.
There is a balance to strike; keep records, but for a reasonable length of time, keep them organized, and keep only what you need. Generally, if your paperwork does not support tax information, you can probably throw them out after a year. When you spring clean household records, look at the dates on the records and try sorting them into two piles- keep and trash.
Look carefully through your “Trash” pile of paperwork. Some financial documents have sensitive information on them. Bank statements, old cashed checks, pay stubs and credit card records that contain your social security number or full account number should be shredded to protect yourself from the risk of fraud and identity theft. Once you throw out your paperwork, there is no way of knowing whose hands it will pass through or how many eyes will see it before it reaches the landfill or recycle plant. You don’t want to put yourself at risk by leaving important personal information unprotected; shred it! Consider keeping containers for trash and papers that need to be shredded, near your desk or work area. Trashing and shredding can be part of your regular bill-paying routine. Sorting as you go might help lower the amount of work you have to do when you spring clean.
Stay on Track
I recently took a look at my own work area and found that I had been keeping way too many outdated records. It took me hours to spring clean. But I think the experience helped me see how I can improve my own skills, and it motivated me to keep working on my finances. I learned that you can always make new goals, get rid of messy piles of unnecessary records, and make your work area more useful, vital, and organized. Even if you manage your household records better than I do, you can still spring clean. Review the records you have saved. Take time to reassess and reaffirm your commitment to your financial goals. Look back at your budgeting goals for the year, and find what has worked for you and what hasn’t. Resolve to re-enforce good habits, and revise habits and goals that do not serve your best interests. On the other hand, if you find you need help assessing and setting appropriate goals, Apprisen’s free personal financial counseling can help you get better organized, build a spending plan and stay on track. Finally, make sure to give yourself credit for meeting any goals, and for all of the efforts you have made. Recognize your achievements and bask in the glory. You can post your successes on social media or just tell a friend. When you finish, I suggest you schedule the next time you plan to return to working on your finances, and put it on your calendar.