In school, you learned all about World War II, chemical reactions, and Shakespeare – but you may not have learned about how to properly manage your finances. Though not often taught, personal finance is perhaps one of the most important lessons that everybody needs to learn. In this article, you will learn about the five most important steps to having an efficient and organized financial life.
1) Create a budget and stick to it
Creating a budget seems fairly obvious, but many people never do it. Having a target and maximum spending amounts will really help keep your finances in check. Be sure to re-visit your budget at least once every month or two and make any revisions that may be needed as a result of unexpected changes in your circumstances.
2) Create and manage a filing cabinet
Even though most bills nowadays will be delivered electronically, not all of them will. For example, many cities will send water bills and property tax bills via mail. You need to have a proper organizing system in place for these documents (and any other important documents you may have), and a filing cabinet is still the best way to do it. A little time invested in properly coordinating everything now will make your life easier in the long run.
3) Pay bills the day you receive them
Paying your bills on the day they arrive is a great habit to get in to. It means that you have a better idea of how much money you have to spend on other things, and it helps to make sure that you do not forget to pay them. Forgetting to pay a bill can lead to anything from a negative mark on your credit score to your power being shut off.
4) Have two bank accounts
This one might sound a little strange, but can actually be a great way to save money. If you open a second bank account and transfer money to it regularly (ideally straight from your paycheck), you can use it as your rainy day fund. Don’t spend a lot of time looking at or worrying about your second account – the money will be there when you need it.
5) Get a credit card and pay it off every month
Credit cards are one of the best financial tools in your arsenal if you use them correctly. They can be deadly if you misuse them. Get a credit card (preferably one with a good rewards program) and pay off the balance in full every month. This will help you to build your credit score and will also allow you a little financial flexibility when you need it. Be sure to check your statement every month to catch any errors or fraud that may occur.
Though the path to financial organization may seem a little daunting at first, with these five helpful tips you will be well on your way to monetary success in no time.