Do you ever find yourself living from pay check to pay check? Never being able to save or don’t know how? Asking yourself ‘where did all my money go?’. Or simply wish you could have a bit more structure/ organisation with your banking? If so, this post is for you!
We are all our own banker nowadays. Online banking has made it simple and easy for the individual to be in control of their finances. See your balance at any time of the day, move money around, pay bills without the need of a cheque book – it could not be more straightforward. (If you haven’t signed up for online banking yet I highly encourage you to do so – the steps below will be incredibly easy with it).
But when your salary comes in, what is your next move after that? Are you organised beyond knowing that ‘you will have enough’? Through trial and error I have developed an easy way to ensure that a) my bills are paid b) we top up our savings each month and c) we still have enough money left to last us until pay day.
Follow my 5 steps below for this weeks ‘5 Top Tips on a Tuesday’ and you too can feel confident, savvy and in control with your banking!
Work out your totals
Before we begin you really need to know exactly what is coming in and out of your account. If you have 2 salaries going in/ multiple jobs, figure out your total income for the family. You also need to look at all your bill payments. How much in total do you need in order to pay the bills? Include everything from mortgage, phone bills, utilities, magazine subscriptions, gym membership, credit card payments etc.
Create 3 accounts
You need 3 accounts – bills, savings and everyday accounts. If you wish, bills and savings can be online accounts only, then you do not need to worry about having too many cards. Have your salary come into the everyday account and payments coming from the bills account. Separation of these accounts is crucial in the simplicity and organisation of your finances – knowing what is ‘usable’ money and what needs to be kept aside.
Keep track with a monthly diary
In order to understand fully what you spend everyday, week in, week out, keep a spend diary. Break the month down into weeks and write down everything you buy. Receipts make this really easy to do – just keep hold of them and at the end of the day jot down what and where you have spent money. You only need to do this for one month if you wish, but it will really show you exactly how you spend your everyday money and where.
Assess your weekly spend
Once you have completed the diary you will see exactly where your money goes. Do you spend more than you thought? Has that coffee habit become a $$$ problem? Sit down with your partner and go through where you could save some money. Often seeing the hard truth in front of you is all the motivation you need to change! That $$$ coffee problem could be $$$ towards a holiday!
From this you will be able to figure out a weekly spend budget – this means that each week has an allocation of X amount of money. Try to stick within that budget. Doing this will ensure that week one and week four of each month has the same amount of money to spend – knowing that even the week before pay day will be a breeze – satisfaction indeed!
Also take a look at what goes out of your account in terms of bills. Did you realise your utilities were so high? Maybe time to change provider?
Income comes in – now divide
So, your total income arrives safely in the everyday account – what next? First you take out the amount required for payments and transfer into the bills account. Look at what is left – it is up to you to decide whether you want to put X amount into savings and leave the rest to divide up as a weekly budget or vice versa. For me, I have a weekly budget amount, I take that away from the total and whatever is left I transfer into our savings account.
See, it can be easy to be a savvy banker and know exactly what is going on with your finances! It takes me 5-10 minutes each month to divide the money into the 3 different accounts and then I don’t need to worry. And if you don’t have online banking, why not pop into your local branch to sign up – it really is a life game changer!
Do you feel organised with your banking?
Have you ever done a monthly spend diary?