How to Organize Your Personal Finances

Getting on top of the money in your pocket and bank accounts is easy with this 3 step guide:

1. Take Control and Round Up Your Accounts

Doing a reality check of all your bank accounts, credit cards, loans and other finances is the first step to controlling your money rather than letting it control you.

  • If you have a spreadsheet application on your computer, then set a new one up or just start off with the old fashioned pen and paper.
  • Make a list of all your finances, whether they are current accounts, savings accounts, credit cards, loans, piles of cash under the mattress or premium bonds.
  • Find out how much you have / owe: use your online banking to check accounts, (if you don’t know how to access them, then make a commitment to start sorting this out today), go into branches, dig out your latest statements or ring the appropriate companies to find out exactly where you stand.
  • Get a little notebook and write down everything you spend for the next week, every last packet of chewing gum, quick shop at the supermarket or impulse purchase on ebay, put them all in writing.

At the end of a week, you should have a clearer idea of where you stand.

2. Decrease Your Debt

If you have debts on credit cards and loans, take a look at the interest rates (APR) and see which ones are costing you the most. These are the ones that you should aim to pay off soonest. Check for early repayment penalties though as this might mean it is better to wait and pay off other debts first.

3. Get Serious About Saving

If you have cash sitting in low interest savings accounts, consider using this to pay off debts or moving it to better paying accounts. Make sure you are using your annual  allowance so that you don’t have to pay interest on your savings income.

In the current uncertain economic climate, it makes sense to try to build up a safety net of 3-6 months net wages. Is this achievable? Take a close look at what you are spending your money on and see if there are any areas where you could be putting money aside for the inevitable rainy day.

Are you spending more than you have coming in? Your weekly spending diary should help you work out where the extra money is going. Good luck and remember to allow some money for little extras now and then to reward yourself for being such a sensible, savvy saver.

Viv Egan writes for Thomson Local, an online directory for local businesses including accountants.

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