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Financial Spring Cleaning: A System to Organize Your Finances

Daylight Saving Time is upon us and spring is right around the corner.   As the yearly weather cycle starts anew, you’re most likely trying to find motivation for spring cleaning and, once again, getting your life in order.  We may not have any advice on how to better organize your house, but we do have a system to get your finances in order.

To keep track of everything, your payments should be in four categories: mandatory (money that needs to be spent every month in bills), necessities (money for food, prescriptions, appointments), savings (money that is put aside to your savings), and disposable (money to spend on anything else). To start off simple, write down the amount of money you make per month (not including money that is taken out of your paycheck for taxes).  You need to know how much money you have to work with.  Next, make a list of monthly bill payments and the dates they are due. 

The total of these payments is the amount of money that you should guarantee coming out of your paycheck without other considerations. We suggest you put these due dates on a calendar to make planning and record-keeping that much easier.  Making those monthly payments on time will put your mind at ease and help your credit score.  After you have your total mandatory spending, subtract that from your monthly income to get a new subtotal. Now you have a new income amount that can be dispersed between necessities, savings, and other luxuries.  Next, write down the things you need to buy each month in order to function, such as food and medicine.  Estimate a monthly total on those items and subtract that number from your subtotal.  If this number is greater than zero, you still have money left over to put in your savings.  If it’s a negative number, you’ll need to adjust your necessities budget or set up payment plans for some of your bills. Let’s assume this new total is greater than zero (and hopefully it is).  This is the amount you’ll have to divide between your savings and your disposable income. 

Set aside a certain amount every month for your savings to have for future emergencies.  The rest is yours to spend and have fun with!  Although disposable income should be the last portion of your finance budget, it should not be taken for granted.  Ideally, you’ll have a little bit of money to go out with friends and enjoy a night or two you’ll never forget. Hopefully this gives you a good idea of how to get your finances in order and keep your life on track.  Get this task out of the way with ease so you can move on to the actual spring cleaning.

Photo credit: Shutterstock / Andy Dean Photography

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Logan Abbott's picture

Logan Abbott is a personal finance and credit card expert with over 5 years of experience writing about each topic. He is a graduate of the USC Marshall School of Business, and also contributes to other online finance publications. He has been quoted in the New York Times, San Diego Union Tribune, TheStreet, and more.

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