How Well Are Your Finances Organized?
The word finances has become a regular part of our
diction. We as a society and as individuals are learning the
importance of finance and monetary strategy.
Money has become more and more valuable as we are tend
to our finances ever increasingly. Organizing our
finances can help improve our relationship with money
and subsequently decrease the headaches that come with
poor financial standing.
The best way to begin organizing your finances is by
creating and keeping an effective budget. This will allow
you to keep track of your money–how and where it
currently goes, no matter the amount. This also helps you
know how your finances are doing: whether they can be
classified as health or unhealthy.
The hardest task of budgeting is determining how
much to money to allocate to each category. You will
have a good starting point for each budget category if
you start tracking what you currently spend. This will
also help you determine where your spending limits
People seem to spend less when they track how much
they spend and learn how quickly it can add up, creating
a personal finance deficit.
You need to know everything that your money is doing
and why it is doing it. This will help you to make more
informed decisions about purchases. You will also need
to become knowledgeable about how much you can actually
afford to spend on things.
These percentages that follow will provide a good rule
of thumb for what you should be spending as a percentage of
your income on some of the major budget categories:
35% – Housing — Spend no more than 35% of net income on
housing. That includes mortgage or rent, utilities,
insurance, taxes and home maintenance.
20% – Transportation — Spend no more than 20% of net
income on transportation. That includes car payments,
auto insurance, tag or license, maintenance, gasoline
15% – Debt — Spend no more than 15% of net income on
all consumer debt: student loans, retail installments
contracts, credit cards, personal loans, tax debts and
10% – Savings — Save at least 10% of income throughout
your working life.
20% – Other — Spend no more than 20% of net income on all
other expenses: food, clothing, entertainment, child care,
and medical expenses.
To help you get your finances more organized it is
important to incorporate some useful tools that will make
everything you do concerning your finances easier. These
will help you overcome the normal challenges that face
people when they try to keep a budget. Using personal
financial management tools, such as Microsoft Money, will
make your budgeting more practical and simple, allowing
you to integrate financial calculations into your