The hardest part about staying on top of your personal finances is the set-up. Realistically, initiating a new system to track and analyze your spending, saving, and income can take up to five hours. After that, you’re ready to move ahead.
With a disciplined plan in place, managing your money can take as little as 30 minutes a month.
Two crucial practices I’ve adopted include a personal bookkeeping system and keeping an optimistic mindset about money. Here are eight more tips to live a life of financial wellness:
1. Choose a process or program: This will depend on your learning style and personal preferences. Some people will opt for pen-to-paper tracking, others succeed with high-touch software, and others trust algorithms to do it all for them. The more involved you are, the more accurate your data will be and you’ll experience a higher level of awareness. Be wary of software with tons of automation, you’re handing over control and could be losing touch with your financial reality.
2. Learn the system: Watch video tutorials, read user manuals, or hire a coach to guide you.
3. Define your lifestyle: If you use financial-planning software, you should be able to customize the spending, saving, and earning categories. Anything less can lead to frustration and ultimately make your commitment to financial wellness unsustainable.
4. Put everything in its place: Create a baseline budget and organize your periodic, non-monthly expenses separately.
5. Prepare for the worst: Keep two regular savings accounts — one for periodic expenses and one for a safety net with at least six months’ worth of living expenses set aside in case of fluctuating or interrupted income. Open a third savings account for taxes if you’re self-employed or tend to owe money each year.
6. Consolidate: One checking account for your family is enough (mature children aside), and carry just one credit card or none at all.
7. Communicate: Be patient with the inevitable learning curve that comes with starting any new healthy habit. Ask for help and don’t give up — expect two- or three months of trial and error to feel comfortable and confident. If you’re married or living with someone and you share money, you must have at least two “money-honey” dates every month. You can plan and make decisions together, follow up on financial housekeeping tasks, review your household budget, and help each other stay on track for your shared savings goals and lifestyle vision.
8. Stay the course: Twice a month, review what’s happening with your tracking and budgeting system. Tweak anything that is askew and make sure all transactions are properly categorized. Mid-month, adjust your budget as needed to make sure it’s still balanced and to ensure you will end the month where you need to be. This end-of-month routine involves reflecting and planning. Many people find it eases financial anxiety to look at their bank accounts several times a week to track cashed checks, monitor their balances, reduce surprises and remain connected.
These suggestions are listed in order of priority. Lasting financial wellness comes from completing all parts of the set up process. Your relationship with money was not created overnight, so it will take time and energy to shift it. There are infinite benefits to giving your money purpose rather than feeling like a victim of your financial situation. I promise the effort will be worth every penny.
Carrie Friedberg is a certified money coach and financial behavior specialist. Learn more about her holistic approach to personal finance at SF Money Coach.
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