Managing your money often seems like an impossible task. Between the communication issues that arise between spouses, debt and credit woes, and even the day to day frustration of managing different bank accounts, personal finance is daunting.
Luckily, with all of the technological advancements we have, you can manage your money in about 5 minutes a day, without even trying.
Choose Your Dashboard
Cash flow sounds like such a deep word, until you realize that for personal finance purposes, it just means budget: knowing how much money you have coming in, how much you have going out. Cash flow management is simply choosing where your money goes.
The word budgeting seems to inspire dread in so many people, but rather than getting hung up on the word, let’s call it a spending plan. The spending plan tells you when bills are due, when you’ll get paid, how much you need to save for retirement and big financial goals, as well as how much you have left over for discretionary expenses. If you don’t use a budget, then chances are you aren’t super aware of where your money in going, and how fast it is going there.
Setting up a budget is actually pretty easy, and can be done in just 5 steps. Once the budget is set up, managing your money according to that spending plan takes only a few minutes each day.
The best tool to use to manage your money on a daily basis is Personal Capital. Personal Capital is very similar to Mint.com, except it gives you way more information and is much easier to use. Personal Capital allows you to aggregate your financial accounts so that you can easily see your entire financial situation. You can connect accounts like your mortgage, bank account, credit cards, investment & retirement accounts, and more. Even better, Personal Capital is FREE.
Most days, I start out by categorizing transaction in Personal Capital. If the system placed transactions in the correct categories I leave them alone, and if it mis-labeled them I correct them. Then, I move on towards comparing our cash flow. How does our spending compare with our income?
I do this every day because staying on top of our money for a few minutes each day is much easier than reviewing a week at a time and trying to remember what specific transactions where for. Plus, it is always nice to know exactly how much money we have in our account, so if I need to make a quick stop at the grocery store and know what I can and cannot spend.
Going into the store “blind” is no way to make your budget stick. I guarantee you that you’ll spend way more if you’re oblivious to your money than if you’re on top of it.
Automate What You’re Comfortable With
Monthly expenses such as phone, internet, utilities, and insurance are either the same month to month or we feel pretty confident that they’ll be accurate. When those bills come in the mail – or in the email – I glance over them for any obvious abnormalities, but then automate them so their paid on their due date every month without having to lift a finger.
We pay some bills, like our credit cards only after reviewing the bill for fraudulent transactions, but we pay them online to save a stamp and a whole bunch of hassle.
Do Manual Payments All At Once
Each payday, the hubs and I sit down to review and pay bills that we prefer to pay manually. Usually, this means that we pay an entire month’s worth of bills in one sitting, but the actual bills we paying during a bill pay session vary from pay period to pay period.
Save For Annual & Semi-Annual Payments
Property Taxes, Personal Property Taxes, and insurance like Auto and Home. To account for these, we take the total amount of premiums due and divide them by 12, giving us the number we need to save each month. Then, we have that amount automatically transferred to savings each month. When the bill comes due, we already have the money ready.
If you’re looking for there to be more to this article, you’re not going to find much, because managing your money day-to-day is actually a very quick and easy process.
Personal Capital allows us to link all of our accounts so we see them in one, easy to use dashboard. From there, we monitor our income and expenses, as well as our savings accounts so that we’re prepared for less than monthly expenses.
And it all takes less than 5 minutes a day.
What is your favorite tool to manage your money?