Create a system for your money

Whether you’re a new graduate starting out or someone starting over in your personal finances, a well-organized financial system is a must.

You don’t need a complicated system; in fact, the simpler it is, the better.

In a recent Rotary Club of Tumon Bay meeting, a feng shui expert mentioned that eliminating clutter and simplifying life is part of Feng Shui. Eliminating clutter assists in balancing your life.

When you create and stick to tools that help you manage your finances, those tools can protect you from financial pitfalls and give you a greater sense of control. Saving money, keeping on top of your bills, and planning for the future are all great reasons to put together a good personal finance system in the months ahead.

Try to keep your financial system in a permanent, dedicated place. Here are some of the basic files to keep in your system:

Your goals. A glance at your goals can give you fresh motivation when you’re tempted to spend instead of save, so keep that file nearby. You can split your goals between short-term and long-term goals, and you can list the reasons why you chose each goal to help you prioritize.

It’s also helpful to translate your highest priority goals into specific bi-weekly or monthly amounts that you can divert toward your savings. You can keep that list here, and refer to it when you put together your budget.

Your receipts. When you keep your receipts in a file, you can easily calculate your real-time balance on any specific account. Some transactions can take a few days to settle, so that when you view your account online, you may not see all of the transactions you recently made. When you don’t know your balance, it’s easier to overspend and end up with overdraft charges on your next statement. If you don’t view your accounts online, it’s even more important to hang onto your receipts and track your balance throughout the month.

When your monthly statement comes in, compare your receipts to the statement, and cross off the amounts that match. This can help you look out for any potential mistakes in your statement.

Your bill schedule. A simple reference list of the due dates for all of your obligations can help you stay on top of your bills. You can use this list to update your general calendar at the beginning of every month or year.

Your budget. Your budget is the control center for your finances. It combines your income with your goals, your bills and your spending categories, and determines whether you spend less or more than you earn, and by how much. When you can see where your money is going, you can make decisions to divert spending from one category to another, and target areas where you can look for more savings.

Account files. Keep a separate file for each account, and file statements and communications as soon as you get them. If you need to reference your files for taxes or your budget, you can easily retrieve them.

You can add more files for financial tips, future goals, taxes, pay stubs, and any other material that can help you manage your finances.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover,  please email him at  moneymattersguam@yahoo.com

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