Today’s fast-paced world means that we are more likely to be pressed for time when it comes down to everything – including managing our personal finances. Whether you’re a busy professional, or working two jobs just to get by, sitting down to track spending and pay bills can feel like a huge annoyance. And forget about trying to plan for the future – you’re just trying to keep your head above water.
Here are four suggestions (and warnings) for streamlining your finances when you’re always on the run:
Automate Your Finances
If a large part of your finances are automated, you have much less to worry about in terms of tracking expenses and paying monthly bills.
Every utility vendor at our place of residence now offers automatic bill-pay, where the appropriate amount is deducted from our checking account each month without having to lift a finger. That takes care of utilities.
Monthly subscriptions are handled in a similar fashion. Companies love to bill your credit card because they can keep their billing costs down and stop chasing you to get your bills in on time.
Our transfers to savings and retirement accounts are also automated, as our payments to student and car loans.
Word of Warning: One of the biggest complaints about automating finances is the inevitable overdraft fee. You must build a large enough buffer in your checking account (you set the number – we keep about $1,000-$2,000) so that if payments clear early or checks take longer to deposit than expected, you will be okay.
Once a buffer is in place, an amazing thing happens – you can stop checking your balance every 3 hours and worry about more important things. Plus, it acts as a nice emergency fund in case of a fast need for cash.
Use a Broad Budget
If you barely have time to track your expenses, don’t put a bigger burden on yourself and track every detail and transaction in your register, trying to organize it in one of 65 different budget categories.
A simple budget can have as little as 10 categories or less and still provide enough detail to understand if something’s going wrong. Before I committed to an envelope budget (which for us, works better in the detailed form), I used only 10 categories – Cash, Charitable, Home, Home Business, Insurance, Loans, Planned Expenses, Services, Unplanned Expenses, and Taxes. Savings were treated as transfers, but I suppose you can call it #11.
Setting up as simple a budget as possible prevents getting frustrated with it and lets you go about your day in peace. Just make sure to set aside weekly time to review your bills, ensure that your automatic transactions completed successfully, and that your budget is on track for success.
Stop Paying for Urgency
Several months ago, my wife needed to send a small package overseas with a couple of Valentine’s Day gifts. She put it off for over a week as the holiday approached. Before she realized, there were only five days left to get it there.
I knew I had to take the trip to the post office with her, or she was going to over-spend. Sure enough, when we got there, the express shipping would cost over $30 and take an (unguaranteed) 5-7 days. Regular shipping was $4 and 7 days.
The strangeness of the post office’s delivery times aside (and I may be off by a few days, but not too far) paying almost 10 times the price to potentially get it there 2 days earlier was not acceptable.
Lessons learned? Don’t let your own procrastination back you into a corner you can only get out of by paying more. You will always pay more for urgency, and companies know and bank on this.
Use Cash to Cap Everyday Spending
This is an extension of my first tip (automation) and the second tip (simple budgets). I recently wrote about using a cash-only diet, but you can opt to take the same concept and apply it long-term. It’s one of the easiest options for automating your spending and ensuring that your budget is met every month (without having to actually refer to it all the time).
The concept is simple – use cash for all daily expenses where you’d normally pay with a debit or credit card.
Setting a weekly spending limit allows you to both satisfy your need for simplification (you don’t need to worry about what you spend on, just staying within the limit) and need for automation (you can take out cash on a regular basis – a form of automatic “payment” to yourself). In essence, it becomes a spending “salary” you pay yourself every week, knowing that the remainder of your money is assigned to work for you in various ways.
What do you always over-spend on when in a hurry? How do you deal with a lack of time to manage your finances? Please share your tips in the comments!