6 Ways to Practice Efficient Money Management
A Place for Everything
Getting organized in the home is the first step in dealing with personal finances. This means setting up a desk or dedicated space for the time you’ll be spending with household taxes, bills, banking and investments. Keep the paperwork separated in files and stored in a safe place away from traffic and bustle — a small filing cabinet or even a sturdy banker’s box will work. For stuff that you just can’t lose — passports, insurance policies, mortgage deeds, birth certificates, Social Security cards — use a small safe.
Money Time
Set up a time of the week or month in which you’ll have to clock in to personal financial work. Make it a time when you’re at low risk for interruptions, incoming phone calls or distractions, and have a clear shot at use of the family laptop. Traditional daytime working hours allow outgoing calls if you need to clear up billing issues or wrangle with the IRS over your taxes. Dealing with each money issue immediately and every time something comes up — and something will come up, frequently — is less efficient overall than scheduling a regular money time to handle these tasks.
Do It Online
Get your bank and credit accounts set up online. This means registering with the provider, deciding on a password and login, and keeping the relevant info handy. By paying your accounts online directly out of your bank account, you save the time and hassle of sending out checks, and you avoid late fees. Monthly automatic payments will save you the trouble of even worrying about regular minimum payments — all you need to do is make sure that your bank balance is always able to cover the payments.
Get With a Program
Personal finance software can help you pull together budgets, keep track of expenses, calculate deductions for taxes, and kick out forms, reports and statements. It doesn’t have to be complicated; many software packages feature very simple interfaces that walk you through it all with point-and-click graphics. Keep in mind that anything you buy related to tax preparation, or any office equipment needed for self-employment or a small home-based business, is tax-deductible — as is the space in which you use it.
Free Advice
If you’re getting bogged down in the numbers, there are nonprofits galore that can assist you with finances and budgeting. A one-on-one counseling session over the phone may take a bit of time, but it can help you straighten out money matters. An adviser can make suggestions on handling debts, setting up regular utility payments that won’t vary every month and season, and “paying yourself first” — in other words, putting money aside regularly. As for investing those savings, “First, figure out what your risk tolerance is,” advises Mike Connor of Dougherty and Associates. “Look at your past experiences, and how you handled your gains and losses.”
Efficient Investments
A long-term investment commitment is a smart play if you’re thinking ahead to life’s bigger financial challenges: higher education for the kids; a big-ticket purchase, such as a vacation home; or retirement. Investing efficiently means not chasing hot tips or the latest investment system that promises to beat the market. “You can’t put a simple equation together for the markets,” advises Connor. “There’s risk in everything, and the best way to deal with it is to learn about the whole range of investments.”
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