Love it or hate it, money matters. I’ve found that many people with consistent financial issues actually fear money and hate thinking about how to manage it. They don’t know what to do with it, how to spend smartly, how to save wisely, or how to set financial goals that help hold them accountable to themselves.
If you fall into that category, help is here. Start picking up the pieces of your broken-down budget with these tips on how to get your dollars and cents in order — even when you dread it.
1. Automate everything
The more bills you put on autopilot, the less you’ll have to think about what needs to go out and when. The key to this system working properly is keeping the required amount of money in your account so it’s there on the due date. If you don’t have the funds, you’ll overdraft, which not only defeats the purpose of this simplification, but also puts you in an avoidable debt situation.
Almost all your bills can be automated these days. Christy Rakoczy, personal finance expert with Student Loan Hero, details how.
“Set up automatic bill pay to pay off your credit cards each month, and to pay utility bills, mortgage, rent, and other fixed expenditures. Other than checking your account balances once in a while, once you’ve automated everything, you should never need to think about money again. All your money will go exactly where it needs to and you’ll know the cash left over in your checking account is for spending.”
And bills aren’t the only things you can automate. If you dread facing your retirement accounts dead-on, automate those, too.
“If you have a workplace 401(k) plan, talk to HR about setting up automatic contributions if you aren’t already contributing,” Rakoczy says. “You should contribute at least enough to get your employer match, but ideally as much as 10 to 15 percent of your income. If you don’t have access to a 401(k), you can set up an IRA and make automatic contributions to that account as soon as your paycheck hits your bank account.”
Once you’ve got your retirement accounts and bills automated, set up automatic transfers to other savings, such as an emergency fund, a vacation account, or an account to save for a house down payment. Whatever your goals are, have a dedicated account to save for them and move money automatically into that account each month. (See also: How to Use “Bucket Budgeting” to Overhaul Your Finances)
2. Enlist the help of apps
There’s no shortage of personal finance and money management apps available to you — some more user-friendly than others. If you’re having trouble tracking your cash flow, maybe it’s time to give one a shot.
Mint, Personal Capital, and Intuit Turbo are just a few of many available tools that can help you track and manage things like upcoming bills, low balances, or unusual spending so you never miss a payment or spend more than you have. If you aren’t someone who checks their bank account regularly, these reminders can help you stay on budget and know exactly where your money is going and where you need to cut back. (See also: These 5 Apps Will Help You Finally Organize Your Money)
3. Establish a “same place, same time” schedule
I’m a creature of habit, and if something isn’t on my daily schedule or logged in my calendar, it probably won’t be accomplished. Same goes for you, I bet. Rather than trying to manage your money and expenses as they come in, consider setting up a time when you know you’ll be free and clear to “meet with your money” on a weekly, biweekly, or monthly basis.
Student Loan Hero personal finance expert Miranda Marquit sticks to this strategy to stay on top of her finances.
“Once a week, on Sunday evening, I take 15 minutes to scan my accounts and make sure everything is in line,” she says. “Also, on the last Sunday of the month, I take an hour to reconcile my accounts. Because I have my bills and savings goals automated, all I have to do is check in. In total, I spend less than two hours a month managing my money. As long as my priorities are covered with automatic means, and I verify everything’s where it should be, there’s no real need to think about it a whole lot.”
4. Stick to an all-cash system
I racked up a decent amount of credit card debt as soon as I turned 18 because I had no idea what I was doing. Happens to the best of us. But what I took away from that experience is that if I didn’t have the money in my bank account for something nonessential, I had to live without it. That was the only way I was able to dig myself out of debt — sticking to an all-cash system and just saying no.
This could work for you, too. Once all your bills are paid, take out a budgeted amount of cash for what you might want and guide your spending based on those limitations. This tactic will also allow you to see money physically leave your hands, which is a proven deterrent to spending versus debit and credit cards where swipes mean nothing and can get out of hand before you know it. (See also: Is an All-Cash Diet Right for You?)
5. Adopt the 50/20/30 rule
Even if you despise managing money, it’s important to implement spending parameters to keep yourself on track and avoid overspending. If you don’t like the all-cash method, try a different approach, like the 50/20/30 rule.
“Spend only up to 50 percent of your after-tax income on essentials, such as housing; 20 percent on financial priorities, such as debt repayments and savings; and 30 percent on wants or lifestyle choices, such as dining or entertainment,” advises Natasha Rachel Smith, personal finance expert at TopCashback.com. “By adopting a simple yet powerful rule, you can manage your money more effectively.” (See also: How to Manage Your Money — No Budgeting Required)
6. Set a 10 percent total-income savings goal
If you regularly save 10 percent of your income, no matter how much you earn, you will always have the confidence of knowing you are living within your means. It will also pave the way for other financial milestones, such as saving for the down payment on a house or starting a college fund for your kids.
This may sound like an intimidating process, but it doesn’t have to be. Carla Dearing, CEO of online financial wellness service Sum180, breaks it down further.
“Think of saving 10 percent as the way you empower yourself to make ongoing investments in your financial health, year after year,” she says. “This is more easily achieved than you might think. Simply set up automatic bank transfers for the beginning of every month. By doing this, money you have earmarked to save is transferred from your checking to your savings account without you having to lift a finger and before you have a chance to spend it on something else.”
7. Hire a financial planner
If you’re someone who balks at the mention of money management, but also has enough disposable income to farm out the task, consider hiring a financial planner. They’ll take the dirty work off your hands — for a fee — and provide advice on how you can make the most with what you have. Certainly you shouldn’t spread yourself too thin by bringing a planner on board, but if you have extra money to invest in yourself, this is a good start. (See also: 3 Reasons to Be Picky When Hiring a Financial Planner)