How can I organize my household finances? Everything piles up until it’s a big mess because we’re too busy to deal with it sooner!
We are definitely guilty of letting receipts build up in our cars, wallets, and pockets! In our busy daily life, it’s all too easy to simply shuffle piles of paperwork around rather than truly tackling the problem and developing a filing system. You don’t dive into your financial documents until you need to, like when filing your tax return, and then you’re usually stressed. It’s time to tackle your financial paperwork problems to avoid more stress and frustration. While you’ll have to put in some work to straighten things out, our method breaks the process up into manageable chunks of time so you can schedule it to fit your busy life.
On the weekend:
Create a snapshot of your current finances by gathering all the information you have on your current income, bank accounts, debts, and any assets. Decide on a storage method that works for you, whether it’s software, a spreadsheet, a binder, or a file organizer, and start filing or entering your data in your new system. This first step may seem overwhelming depending on how much paperwork you have to deal with, but we believe it’s better to focus on getting it done in one fell swoop to avoid the chances of procrastinating throughout several investigative sessions. Remember that once implemented, your filing system can be maintained with regular attention—it won’t always be this daunting!
The next month:
Track your spending, ideally by looking at several months’ worth of data to get an average view of how and where you spend. We suggest pulling past transaction history from bank statements when you can, spending a few hours a week to dig back in the last two to four months of records. To avoid repeating this digital discovery process, save receipts for all new purchases from here on out and use those to finalize the first draft of your budget. If you need ideas on how to segment your budget, check out NerdWallet’s easy how-to guide to learn about the 50/30/20 rule.
The following month:
Put your budget to the test for a month to discover any pain points. Keep notes of categories you overspend, any recurring costs you may have forgotten, and how your budget has affected your overall mood. Do you feel motivated by the change, or do you feel restricted and depressed? Remind yourself of your goals when your resolve falters or if your financial situation changes and you need to adjust your plans. Are you hoping to pay off your mortgage faster? Looking to max out your Roth IRA? Need to save up for a new car? We like how Just A Girl and Her Blog advocates for a goal-setting section, writing down your goals as part of your budget to help you remember your motivation.
File paperwork and log expenses in your budget before things get out of hand. You can do this daily or several times a week, but we suggest once a week at minimum to avoid paper pile-up.
Every two to four months:
Schedule a recurring check-in session with relevant family members to discuss the household finances. Use this time to update the budget, plan for large saving goals, and adjust your storage or tracking system as needed.