Master Your Money Bootcamp: Set up a system to keep it simple
Welcome to week four of the Master Your Money Bootcamp on demystifying your finances! This week we're taking some of the effort out of managing your money.
Exercise 4: Decide on a system to keep things easy from now on
No one likes to hear it, but it's true: Being good with money is like being physically fit. You don't lift weights for a month and expect to stay in shape for the rest of your life. Likewise, you can't make one budget and expect your money to fall into place for the rest of time. You have to keep at it, and overcome challenges and setbacks along the way.
But the good news is that it's a bit easier to set up and rely on a system for managing your money than it is to get yourself to the gym every day (and avoid fast food).
The goal for this week: To create a semi-automated system that tells your money where to go and when.
1. Using the list you created in Week 1 of all the login information for your online financial accounts, mark down the due date and amount due for each bill. This includes monthly or periodic payments for insurance, debt and credit cards, rent or mortgage, and utilities.
2. Next, set up recurring auto-pay for each bill that's fixed. Only do this if you're sure you have enough funds in your checking account to cover the payments. Overdraft fees are not fun.
To set up auto-pay, go to your bank's or credit union's website (the one where the money will be coming from) and find the bill pay section. Have handy the account number for the business you want to pay - a cell phone provider or a mortgage company, for example. If the recipient isn't already in your bank's system, you may need the pay-to address and ZIP code.
Pick a delivery date that's at least one to two days before the bill is due to ensure it arrives on time.
Tip: If you're a regular credit-card user, you may find it easier to pay bills with one credit card, and then set up auto-pay for that single credit-card payment once or twice a month. Remember that when using a credit card, it's important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay back.
3. Set a recurring calendar event to check in on your system at least every three months, and set a reminder for the day before so you can't procrastinate.
Spend 10 to 20 minutes making sure all your bills are accounted for and make adjustments as needed. This is a good time to evaluate whether you can reduce any of these fixed expenses by cutting out non-essentials or negotiating for a lower rate or payment.
As a reminder, here's what we've covered in this month's Bootcamp:
Master Your Money Bootcamp: Demystify your finances
- Exercise 1: Track down all of your accounts and passwords
- Exercise 2: Figure out how much you owe, to whom, and at what price
- Exercise 3: Calculate your net worth
- Exercise 4: Decide on a system to keep things easy from now on
- Virtual Live Event: Credit and debt
For each exercise, you'll get a detailed explanation of how to complete it and why it's important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.