When your personal finances are well-organized it shows in all areas of your life. Your credit score will be right where it is supposed to be, you will have no trouble securing additional debt, you will be able to afford the things you want in a reasonable time frame and your bills will be paid on time every time. If this sounds like a fairy tale and you are far from achieving this level of organization with your money management take a look at the following steps and you can be on your way to improving your financial forecast.
Set Financial Goals
Goal setting helps to bring focus to your efforts. When you can visualize what you want to achieve and you know how much it is going to cost to get there you are in a better position to start saving towards it because you can break even a large goal into smaller milestones. For instance, if you want to save for a home, you may need to work on your credit score to be able to secure a mortgage, this means you might have to shed some debt and therefore your first order of business will be to dedicate all your excess money to paying off outstanding loans and other commitments.
Find a System You’re Comfortable With
Everyone has a different way of recording and tracking money earned and money spent and this is fine because there is no single correct way to do things. You might like keeping a spreadsheet on your computer, someone else might be more comfortable using a notebook and adding things up manually and someone else might be excited by the functionality of a money-management software like Quicken. The key is to use a system that you are comfortable with, because if you are not confident about your system you are not likely to follow through.
Keep it Simple Stupid!
One of the foundation principles of personal finance is to keep it simple. Don’t go into too many levels of detail because not only can this practice take more time than it is worth, it also serves to discourage future effort entirely because the process becomes tedious and dreaded. Instead, make an effort to compile enough information to tell if you are on the right track or not and file only what it is important to keep. Part of keeping it simple is also ensuring your payments and even savings is automatic. This removes the human effort required to make transfers and makes sure it gets done.
Track Progress Regularly
To keep your finances in good order you must also spend some time tracking your progress. Revisit your goals to determine if more can be done in certain areas or allow yourself a reward when things go better than expected. Tracking can be a form of motivation as well because you get to see how much you have achieved and how far you still need to go.