Getting your finances in order doesn’t have to be complicated. With a few simple steps, you can organize your finances and take charge of your financial life. The best part? Once you do it, you’ll be in a better position to manage your money and reach your financial goals.
Here are six tips for organizing your personal finances:
The first step in organizing your finances is understanding your personal cash flow over a specific period of time, typically a month. Knowing your cash flow will help you identify where money is coming in and going out. Here’s how you can calculate your monthly net cash flow:
If your net cash flow is positive, you have a surplus. You can put that money toward savings or paying off debt.
A negative number indicates a deficit, or that you’re living (and spending) beyond what your income can support. If that’s the case, create a budget to live within your means.
Take a closer look at your monthly expenses and categorize them. Some spending categories to get you started include housing, transportation, food, utilities, medical, savings, and entertainment.
Now, you’re ready to create a budget using the 50/30/20 rule. With this rule, 50% of your income goes toward needs (like housing, food, and medical), 30% toward wants (like entertainment), and 20% toward savings or paying off debt.
Some debts are worse than others. To get a grip on your debt and determine its impact, take a closer look at your recent statements. Write down the lender or creditor’s name, total amount owed, minimum monthly payment, and interest rate for each account. This will help you identify which debts have the highest interest rates and monthly payments—which are the ones costing you the most.
Paying off the debt with the highest rate first is a good strategy. For that debt, you should pay as much as you can afford within your budget. Then, pay the minimum amounts on all other debts. Once the highest rate debt is paid off, move to the one with the next highest rate, continuing until all debt is cleared.
Creating an emergency fund gives you the financial flexibility to withstand an unexpected financial expense. It typically covers three to six months of living expenses. Start small and grow your fund over time—you can even make it part of your budget.
Federal law requires each of the three main credit bureaus—Equifax, Experian, and TransUnion—to provide you with a free credit report every 12 months. You can request yours from annualcreditreport.com.
Stagger your requests to each of the three bureaus every four months, and you’ll be able to review your credit report three times a year for free. Requesting your free credit report does not negatively impact your credit score, and regular reviews allow you to track your credit history, spot and correct errors, and even detect fraud.
Not only do online and mobile banking make managing your accounts more convenient, but they usually come with features that can organize your finances. BrioDirect’s mobile banking app offers free digital tools to enhance your financial life, including:
BrioDirect’s mobile app even allows you to link external bank accounts to provide a complete picture of your finances all in one place. The app has everything you expect from a mobile banking app so you can manage accounts, transfer money, and deposit checks, along with easy-to-use, innovative tools to organize your finances and simplify your life.
Not a BrioDirect client? Learn more about High-Yield CDs, Money Market, and Savings accounts. All BrioDirect accounts feature low minimum opening deposits and free access to online and mobile banking.
*For informational purposes only.
All deposit products are provided by Webster Bank, N.A. ("Webster Bank"), an insured FDIC institution. BrioDirect is a sub-brand of Webster Bank. Webster Bank operates under the trade name BrioDirect. This trade name is used by, and refers to, Webster Bank, a single FDIC-insured bank.
Accounts that are opened via www.briodirectbanking.com and marketed by BrioDirect are Webster Bank accounts. Deposits in these accounts are made with Webster Bank. For purposes of determining how much FDIC insurance is applicable to your accounts, you need to consider not only the BrioDirect online savings, CD, or checking accounts that you maintain, but also all other accounts you maintain at Webster Bank.