We all have our methods for keeping up with our finances: some people have a shoebox of receipts while others have intricate computer software. There is no right or wrong way to track your spending, but for those who are looking to revamp their financial organization, we have some tips and tools for you.
Dividing and Conquering
According to this CNN Budget Allocation tool, your personal budgets should be allocated like so: 30 percent – Housing & Debt, 25 percent – Taxes, 4 percent – Insurance, 15 percent – Savings & Investments and 26 percent – Living Expenses. Using this tool, or using computer software, create a pie chart breakdown and hang it in a place you can easily see it (like the refrigerator). This way, it’s front of mind.
Another way to keep your budget top of mind is with Cash Budgeting, or Binder/Envelope Budgeting. This is where you take your monthly allocations out in cash and place them in marked files, which allows you to physically see how much you have left to spend on any given budget line item.
While the system doesn’t work for debt payments and other vendors, seeing the cash come and go helps some people stay on track. To get started, a search on Pinterest will pull up tons of pins offering printouts and strategies for creating and maintaining a cash budget spending system.
Blocking and Tackling
Keeping up with your finances doesn’t just require proactive planning; it also requires reactive blocking and tackling in terms of identity theft and fraud. By law, you’re able to annually download one free copy of your credit report from each of the major credit bureaus (Experian, TransUnion and Equifax). To obtain a copy of your credit score, go to www.annualcreditreport.com and you can get your reports from all three bureaus at once.
It can be easy to forget about payments, especially if you have them on auto-withdrawal from your bank account, but keep an eye on these, too. Magazine subscriptions and other membership renewals may re-up automatically without notice, and on a month where your budget is tight, that kind of thing can put you over.
Evaluating and Revising
It may take a while to find a system or a method you like. If you find yourself deviating from a plan or resenting the process, stop what you’re doing and find a new plan. There’s a process for us all.
Chesapeake Bank has many resources and tools to help you stay in control of your financial situation, including a Financial Fitness Course. This module-based course is set up so you don’t have to complete all the sessions in one sitting.