Handling your money effectively can feel like a burden if you don’t have the right systems worked out to handle bills and other financial issues in a timely manner. Here are six fast, easy actions to help you manage your money, as well as free up some all-important mental space!
1. Request e-statements whenever possible and pay bills immediately.
Bills and paperwork that pile up are like leeches that sap your mental energy. Don’t let them pile up.
2. File paperwork as soon as you get it in a system where you can retrieve it.
When bills come in, you can use PayPal or online banking to pay them, and then use a customized Evernote email address to forward paid invoices directly from email to Evernote for tax purposes. You can use codes in the subject line of the email to automatically add tags to items when you forward them into Evernote so they are all searchable. For example, a subject line “#Q32015 #auto” would indicate that the receipt is from the 3rd quarter of 2015 and should be in the auto category.
I use the Scanbot app on my iPhone to take pictures of receipts for tax deductible expenses when I’m out, and then trash the receipt. No receipts have credit card numbers on them anymore, so there is no security issue there.
3. When it comes to snail mail, it’s best to open it at least every other day.
If you use e-statements 100 percent of the time, most mail is trash. Always shred credit card applications (cut them up with a pair of scissors if you don’t own a shredder), as you don’t want someone else getting their hands on them. For paper bills from new vendors, set up electronic bill pay. I use a ScanSnap scanner for paper items that I want to record, so my office is completely paperless.
4. View bank transactions every day.
The most important practice for simplifying your finances is logging into your bank accounts and viewing transactions every single day. This takes me less than two minutes; I view transactions in all four of my checking accounts (two personal and two attached to businesses I own) so I always know what’s happening in my accounts and can get mistakes (or fraud) cleared up quickly.
5. Use the multiple bank account system to automate your finances.
I’ve automated my savings so that I pay myself first and keep money earmarked for disposable spending in its own account. This strategy, combined with the multiple bank account system where I have a single spending account with its own debit card, means I never have to balance a checkbook again.
6. Know your net worth.
I use Guide Financial (Mint.com is an alternative if you like) as a financial aggregator so I can see all of my investment accounts and bank accounts in one place. That way, I have my net worth at a single glance — my financial dashboard. Personal net worth is a key financial indicator and knowing it empowers you to better pilot the plane.
By staying on top of those key daily tasks, my finances are completely simplified. I haven’t had an overdraft fee in years; haven’t balanced a checkbook; haven’t wondered how much money I could spend and still make my retirement account contribution; haven’t worried about buying holiday gifts; and always find that I have more money saved than I can spend on vacations. Freedom and simplicity!
Hilary Hendershott is a member of the DailyWorth Connect program. Read more about the program here.