Getting Your FInancial House in Order

by Shaun R Smith on January 17, 2012

We’re going to shift gears a little this week and look at some tips to help keep your personal finances in order.  However, these ideas did come from the best practices for business.

With the new year underway and the 2012 resolutions falling by the wayside, I wanted to discuss some ways you can keep your financial house in order. With the economy still sluggish and many people still unemployed or underemployed, it’s more important than ever that you make the most of every dollar.

In business, we have a saying: if you can’t measure it, you can’t manage it.  The same is true for your personal finances. The foundation to transforming your financial life are:

1. Tracking

2. Managing

3. Reviewing

Let’s explore each in detail.



The first step to getting your finances on track to serve you is to get a clear picture of the current state of affairs.  You need to know how much you own and how much you owe.

If you are comfortable with technology, there are several tools to help you get your  finances organized and to track them going forward.  Programs like Quicken by Intuit and, a cloud based solution, allow you to enter all your financial information and then produce reports so you can see everything organized in one place.  These tools even have the ability to connect directly to your financial institutions to keep your accounts up to date on an ongoing basis with every little work on your part.

If you are less comfortable with technology, at least create a template listing all your accounts that are assets (such as your checking account, any savings accounts, cash, investment and retirement accounts, etc.) on the left side of the page and all your liabilities (such as any credit card accounts, car loans, your mortgage, any personal loans, student loans, etc.) on the right side of the page.  When you are paying your bills each month, use this sheet to write down the current balance of each account.  By summing all the accounts on the left and then the accounts on the right, you will see how much you own and how much you owe.



Create a system or process to make sure your finances are being kept up to date at all times.  One simple trick to help you is to call all your financial institutions and ask to have your billing cycle go by the calendar month.  That way, all your statements come around the same time (usually the first week of the next month), and all your bills are due at around the same time.  You then need to set aside only 1 time each month to do all your bill payments and account reviews and reconciliations.

From a task management perspective, remember to eliminate, automate, delegate, or do it.  If you have accounts that you no longer use, or you’ve collected extra accounts that you don’t need, eliminate them to simplify your financial management process.  Next, automate as much as you can.  If you have bills that are the same every month, have your bank pay them on an auto-pay using online banking.  If you have services that can automatically charge your credit card or deduct from your bank account, do that.  Just make sure that you have the balance available when the bill comes due.  Most automated billing services will send you an email or text to alert you when the payment is going to be processed on your account.  This will help you minimize the amount of time you need to spend each month on your accounts.

Lastly, set up an approximate monthly budget.  You can use a spreadsheet for this (such as Microsoft Excel, OpenOffice, or Google Docs Spreadsheet).  Or you can use paper for this also.  At the top, list your sources of income each month.  Next, subtract all your regular monthly expenses.  Then take out any payments you have for debt service.  What’s left is the amount you can either put towards lowering your debts, put towards savings, or use for additional spending.  Of course, unexpected things will arise, but the longer you work your budget, the more accurate you will become and the better you will be at planning for the unexpected.



The last step is to review your whole picture.  Everyone should have some type of financial team. It might just be you and your spouse.  Or it might include your accountant or financial planner.  Maybe you just have a trusted friend who’s good with numbers and money that you want to support you. Whoever’s on your team, the goal is that they should help you make the best decisions regarding your financial future.  Meeting with them on a regular basis (monthly, quarterly, or yearly depending on the individual needs that you have) will keep you on top of your finances and your financial planning.  Even if you don’t have savings, just reviewing your finances to check on the rates that you are paying on your credit card debt, or your 2nd mortgage, for example, can open your eyes to ways to save money and to plan for a healthier future.

While it seems like a lot to tackle, if you take it one step at a time, you’ll transform your entire financial picture more quickly than you thought possible.  Remember, the way to eat an elephant is one bite at a time.  That’s also the way to get your financial house in order and to get onto the path to financial freedom.

{ 1 comment }

Cory Zacker January 26, 2012 at 11:31 am

Thanks for these important tips, Shaun. When running a small business it’s so easy to forget to keep track of everything. I’m learning that it really gives a clear picture of where my tutoring agency is at and what I need to do for continued success. Important stuff!

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