Getting Your Finances in Order: How to Make a Household Financial Binder
I like to think that I’m an organized person. When your spouse is gone for work five to six days a week and you have four kids, you need to be organized. I tend to buy a lot of “things” to help keep me organized. I have a giant dry-erase calendar in my dining room with all of the kids’ appointments and activities listed. I also have numerous totes, folders, binders, and files. However, I always seem to have bills floating around in my car and house.
My husband is self-employed and I am very good at keeping these finances in order but my household financial records have never been extremely organized. I made a New Year’s Resolution to keep track of our household finances. I’m about a month behind but decided it was okay and that I would still do it. To start I had to determine how I was going to keep track of everything so I decided a binder would work best. Inside the binder I put some tabbed dividers and a plastic three-hole-punched envelope to hold my monthly bills.
Then I had to figure out what I wanted to put in it. I found some free templates online that I could use (http://pinchalittlesavealot.blogspot.com/2013/03/free-money-management-essentials.html), but not all of them fit my exact needs, so, I made some of my own. When making your own financial binder it is important to use what works for you and your unique situation.
My Binder
Account Information: I actually decided to keep this one in our fireproof safe because it has logon information to all of our financial accounts. I am the one in the family who takes care of the finances and my husband does not know any of the logon IDs or passwords. If something were to happen to me, he would not know who or what we owe. By writing all of this down, I feel a little better knowing he would have access to everything.
Financial Goals: We are currently saving to remodel the first floor in our house. Sometimes it feels like it will never happen because it’s such a big expense and I feel like I just keep adding money to our savings account with nothing to show for it. But, by writing this goal down and keeping track of our progress every month I can see we are getting closer to our goal and it keeps me motivated.
Balance Sheet/Net Worth Statement: Once a year it is a good idea to calculate your net worth (Assets – Liabilities) and then compare it to the previous year. This is a good way to get a visual of your overall financial health. I added a place to put dates I check my credit reports. I pull one of my three free credit reports every four months. For more information on getting copies of your free credit reports check out the blog post Have You Checked Your Credit Report Lately?
Bill Pay Calendar: Add all monthly bills to a calendar; go ahead and add your recurring monthly bills on their due dates. When you receive a bill in the mail add it to the calendar. This will help you pay bills on time by having a visual.
Monthly Budget: A monthly budget is a way to make a plan for how you spend your money every month. You’ll need a space to put your income and your expenses. I split my expenses between fixed (those that are the same amount every month like my mortgage payment) and flexible (those expenses I have every month that vary depending on the month like groceries). Make sure to make a savings expense and add an amount (even if it’s a small amount every time you receive your paycheck). I also made a column in my budget for “Actual Amount” so at the end of the month I can go back and see if I stayed within my budget in that category.
Expense Tracker: This is probably the most important section of my financial binder. Do you ever look at the balance in your bank account and wonder where your money went? I have had this feeling on more than one occasion. By keeping track of everything I spend in the month I can make sure I’m staying within my budget. This is also a great way to find ways to cut expenses. Not only will I use this form to track my expenses, I will go back to my budget and add each expense and add it to the “Actual Amount” column.
Debt Repayment Plan: Just saying that one of your goals is to pay off debt isn’t enough, you need to make a plan. My debt repayment plan has the total amount owed and a plan for repayment. I then added blanks to keep track of when I make payments and guide me toward my goal of paying off the debt. If you need a little help getting a debt repayment plan PowerPay has tools that can help you.
Again, use what works for you and what makes sense for your life. The important thing is to make plans for your money and determine if it is going to where it should be.
