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I am going to tell you exactly how to start managing your money in only 5 simple steps.

But first.

Today I was having one of “those mornings”; perhaps some of you can relate.

I found myself in a mad scramble to locate a pair of socks that would match my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair.

Even though this simple search only stole a few minutes of my time, it made me think more about the perils of my own disorganization and the potential costly consequences.

When you let disorganization become a habit, especially in the area of your finances, uncertainty lingers in the air like the smell of rotting trash. It may not bother you much at first, but if it’s ignored, the problems will quickly worsen. Over time, you will probably bounce a check, forget to pay your electricity bill, or incur unnecessary financing charges.

Let’s talk about how to manage your money and avoid these costly money problems one step at a time.

Related: Make Money At Home: 10 Ways To Make An Extra $1,000 Each Month

How To Manage You Money Better, Effectively and Save

Much like unsorted laundry, your money is helpless without you.

If your finances require some tidying up, whether minor or major, now is the time to take control and do what is necessary to provide the organization and structure your finances desperately need. You can start by implementing these five easy steps toward organizing and managing your money.

1. Automate as Much as Possible

If you’re like me, you value your time nearly as much as you value money. By automating common expenses, you can save yourself significant time, energy, stress, worry, and, of course, money. As an added bonus, your days of writing checks, licking envelopes, and purchasing stamps will be long gone.

  • Mortgage or rent payments
  • Utility bills
  • Insurance premiums
  • Car payments
  • Student loan payments
  • Retirement account contributions
  • Routine savings

Most major banks will allow you to set up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Some institutions, particularly student loan providers, may provide a small APR reduction when you sign up for auto draft and paperless billing.

managing your money - how to manage your money better, effectively and save

You could streamline this all even further and put your bills all on a credit card each month, leaving yourself with only one condensed bill to be paid (just make sure to pay your credit card bill!). This could be especially advantageous if you receive rewards.

2. Sign-Up for Paperless Billing

When you became an adult, checking the mail each day lost its allure. You can restore fun to the act of walking to the mailbox each day by signing up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances.

And, with electronic copies housed on secure servers, your information is better protected. You’ll be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.

3. Use an Online Managing Money Tool

When it comes to monthly budgeting, I believe everyone should create at least one budget utilizing paper, a pencil, and a calculator. In the interest of simplifying and saving time, however, you’ve plenty of online budgeting tools and money managing apps from which to choose.

After utilizing Gazelle Budget for many years, I recently transitioned to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solution. EveryDollar is an effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular expenses.

Personal Capital offers free financial software service to help users calculate their net worth, set a budget, and manage investments.

Use Personal Capital (free) to get extra help with sticking to your budget.

By using the managing money app (it’s free), you can do the following:

  • See all of your financial accounts in one place (this is huge)
  • Evaluate your spending and saving habits and set retirement goals in real time.
  • Gain transparency into where your money goes each month, set spending goals and adjust as needed.
  • Track your investment portfolio allocation
  • Spot hidden fees in your mutual funds, investment accounts and retirement accounts.

Over 1.3 million people use Personal Capital to track over $312 billion, so they are definitely a very well respected platform.

4. Use Cash Allowances to Plan for Basic Spending

While an automated budgeting platform can certainly ease the burden of tracking a ton of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending. You can include these cash allowances in your budget with one simple transaction on the first day of the month.

For most people, these categories will represent a large percentage of monthly expenses. By implementing cash allowances, your will provide an additional layer of accountability to stay on budget (you cannot spend more money when the cash is gone) while simultaneously freeing up additional time each week.

We can all argue that we’re managing our money, but managing your money effectively requires rules and boundaries both set and followed by you.

5. Eliminate Your Debts

For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, a home down payment, retirement accounts, non-retirement investments, or savings toward the purchase of rental properties.

Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. And you’ll no longer experience guilt each month as financial institutions earn interest on your hard-earned income.

Note: Refinancing your debt to save money is sometimes a smart option. One website you may also want to check out for comparing loan prices for refinancing is LendingTree. They let you compare offers from up to 5 lenders at once, which makes shopping around a piece of cake.

Begin Managing Your Money Better TODAY

If you are willing to dedicate a few hours this week, you can implement the above steps to better organize and simplify your finances. It’s time well spent, and will certainly pay great dividends (pun partially-intended) for your financial well-being. As a result, you will be free to turn your attention from fretting and worrying about your finances and onto building your future.

How are you managing your money today? Are you living day to day with a “rough estimate” of what’s in your bank account or are you tracking your income and spending with purpose? Ultimately the choice of how you manage your money is up to you. Choose wisely. Your future depends on it.

Author
David Cahill

David Cahill is a personal finance blogger, teacher, and realtor. In 2016, David and his wife Meg managed to eliminate $18,000 worth of student loans in 54 days, thanks mostly to extreme saving.

14 comments
Adriana Wertheimer 2 years, 4 months ago

Great post! I’m going to try to use these tips a bit more. I’m not that great a managing my money hahaha
Congrats!
~Adriana

Reply
ginny williams 2 years, 4 months ago

Some really grest tips

Reply
Blogging Mrs B 2 years, 4 months ago

Some very helpful tips! Thanks! 🙂

Reply
Jeff Proctor 2 years, 4 months ago

You’re welcome!

Reply
Izabela 2 years, 4 months ago

Great tips. I’ve automated all my regular payments so I don’t have to worry about missing payments. It really helps.

Reply
Dr.Amrita Basu 2 years, 4 months ago

Very practical and useful tips.I personal ly love planning my budget. Keeping day to day accounts is the best way to keep your budget in line.

Reply
Jeff Proctor 2 years, 4 months ago

I’m the same way. Staying organized is key!

Reply
Miranda 2 years, 4 months ago

There’s some great information here. Must check out Every Dollar. Thanks for posting!

Reply
Kim 2 years, 4 months ago

Great tips. I love grocery shopping with cash. Im so much careful that way!

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Alana 2 years, 4 months ago

One comment I would have re these otherwise great suggestions. Our cell phone account was hacked last year (they changed our email address, took my upgrade date and bought over $1,000 worth of equipment, plus did other things, and to make a long story short, it took about four months to straighten everything out.) One of the things the security people at our cell phone provider recommended is that we go back to paper billing from the paperless billing we had been enjoying. (Another one was to put strict security on the account, which is a story for another day). We took their advice.

Reply
[email protected] Smarter Decisions 2 years, 4 months ago

We just started using Personal Capital and love it! We aren’t “budgeters” and we don’t track savings rate, but this gives a nice overview of all of our accounts. Wish it was around 20 years ago!

Reply
FinanciaLibre 2 years, 4 months ago

Great advice as always, Hero!

Nice work.

Reply
Mardene Carr 2 years, 4 months ago

These days we have to do the best we can to save. Thank you for these great tips

Reply
K. Lee Banks 2 years, 4 months ago

Thank you for these sensible financial solutions. While hubby and I are doing most of these, I definitely want to look into #3 (big fan of Dave Ramsay!) and #5 is an ongoing task!

Reply
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