Keeping your expenses organized is not very exciting. It will never fill your day with fun the way a trip to the mall or a live sporting event would. Yet, unless you keep your expenses organized, none of these things will even be possible. Thrilling or not, staying on top of your bills is a task no small business owner can run away from if they want to be successful. Since you have to do it anyway, why not follow these tips to make it as efficient and painless as possible?
Know What You Owe
Organizing your expenses begins with determining, once and for all, exactly what they are. If this sounds laughably obvious, think again. A surprising number of adults could not accurately tell you from memory what all of their expenses are. The list they read aloud to you and the list on their credit card or bank statement would differ – sometimes drastically. Clearly, this is not the foundation of an organized financial life. So tally up your bills, which likely include some or all of the following:
- Mortgage or rent
- Car insurance
- Car payment
- Subscriptions (gym, magazines, Netflix, etc.)
Get Uniform Billing Dates
If you’re like most people, you get billed all throughout the month. Rent on the first. Car insurance on the fifth. Gym on the seventh. You signed up for all of these services at different times and those days became your billing dates by default. However, this is not the only or even the best way of paying expenses. Actually, it’s needlessly chaotic. Instead of trying to mentally juggle half a dozen different billing dates, call each company one by one and request a new, uniform one – say, the fifth of every month.
This way, there’s no need to constantly ask yourself before every purchase how much money is in checking. Every single bill gets paid on (or around) the same day and then forgotten about until next month.
Schedule Automatic Payments
Once each bill falls on the same date, it’s time to schedule automatic payments. This is an essential step. The number one reason for late fees isn’t that people don’t have the money to pay bills – it’s that they just plain old forget! By automating bill payment, this decision is taken out of your hands. On the date of your scheduled monthly transfer, money is automatically taken from your checking account and used to pay each bill.
The only responsibility you have is making sure there’s always money in the checking account. So long as that is taken care of, you will never see another late fee or payment notice for the rest of your life!
Print Records Periodically
Of course, it’s never smart to leave the entirety of your financial life on the Internet. There are certain types of information you absolutely must have access to in a pinch. That’s why it pays to periodically log in to your bank website and download transaction histories. If you use a money management service like Mint, you can print records from there as well.
To make sure this gets done, establish specific times of year for its completion. Once every two or three months is a good interval for printing off fresh copies of your most recent transaction histories.
Store Financial Documents Intelligently
Next, you’ll want to make sure there’s an organized filing system for all of this paperwork. The exact storage method you use is completely up to you – it could be a locked container (like the one pictured above) or a simple filing cabinet. The idea is simply to have a centralized place where all of your most important and sensitive financial documents safely reside. In this box, store the following:
- Crucial receipts
- Bank statements
- Tax paperwork
- Rent or mortgage documents
- Anything else of serious financial importance
Don’t Rely On Others
Finally, it’s worth pointing out that keeping your expenses organized is a personal responsibility. While many people are happy to schlep this chore off onto their parents or spouse, this is often a mistake. It may not be today (or tomorrow), but someday, the burden for understanding your expenses will fall squarely on you. If you’ve always allowed other people to manage your finances, how will you possibly be ready for that moment?
Instead, resolve to take charge of this unpleasant job yourself. It wont be fun at the time, but having an organized financial life will pay off over and over again for many decades.