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Organize Bills & Your Finances This Spring

Posted by MoneyKey on March 15, 2019
spring cleaning equipment to organize your household and organize bills

The sun is shining, the birds are singing, and the first flowers are starting to bloom. Yes, it’s official: spring has sprung, and with it, our need to clean! Few can resist the urge to dust, mop, and polish after a long winter spent hibernating.

Your home may not be the only thing in need of a good once over. Here at MoneyKey, we think the annual spring clean is the perfect time to tackle all those financial chores you’ve neglected. A little TLC will go a long way to recovering from the holidays and other wintertime expenses, as well as preparing for a busy summer.

Not sure how to add your finances to your springtime to-do list? You’re in luck. With a combination of organizational tips and money management practices, we’re your one-stop shop for financial spring cleaning ideas.

1. Dust off your budget

Your budget is your ideal spending plan that’s easy to forget when faced with real-life expenses. If you can’t remember the last time you checked in with your budget, then it’s time to bring it out and dust off the cobwebs.

It doesn’t take long for a budget to become outdated. This financial tool needs regular maintenance so it can remain relevant at all times. When your budget is current, it’ll help you stick to your plan and reach your financial goals.

If you don’t have a budget already, now’s the perfect time to organize your finances and make one. A budget helps you gain the freedom and confidence to make smart financial decisions.

What to include in a budget              

A budget tracks your expenses and compares them to your income. Ideally, you should make the same or more than what you spend. Otherwise, you may find it hard to pay bills or save money.

When creating your budget, you should include any income you earn in a month. That usually means the amount on your pay stub, but it may also include cash from under-the-table jobs or passive income from investments.  

Housing costs, utilities, food, and your cell phone bill — these regular, big-ticket items likely come to the front of your mind when you start listing your expenses, but don’t stop there. A budget isn’t just a record of the most important purchases you make in a month; it should track every expense, no matter how small or seemingly insignificant.

Whether it’s the coins you funnel into a vending machine or the swipe of your credit card at the gas pump, make sure you list everything. That goes for irregular expenses, too! Accuracy is essential when listing these expenses.

Some other common but easily forgotten expenses include:

  • Union dues
  • Subscription services
  • Household maintenance
  • Banking fees and other financial charges, including online loan repayments
  • Prescriptions, medical and dental care
  • Birthday and holiday gifts

If you think you might be forgetting expenses because you don’t make them often, look beyond a single month when creating your budget. Some financial advisors suggest tracking income and expenses from the past three months to get a good grasp on how you spend and save on average.

For even greater perspective, look further back. If you look at the past calendar year, you’ll find it easier to identify spending trends. It may remind you of an expensive time of the year when you can expect to spend a little extra — like back to school, the holidays, or that inexplicable month filled with several family and friend’s birthdays. 

2. De-clutter expenses

Now that you have a record of how you’re really spending your money, you may not like what you see. Thankfully, the spring is a great time to clear out things that don’t serve you — whether that’s clutter around the house or clutter in your budget.

calculator and spreadsheets

You can pack up excess belongings, toss scrap paper, and donate clothes to charity. As for random spending in your budget, you can “sweep” away any purchase that does nothing but waste your money.

In other words, it’s time to eliminate unnecessary expenses from your monthly budget.

For most people, bad spending habits involve variable expenses on fun things — stuff like your weekly takeout, Friday night drinks with co-workers, or weekend shopping for clothes. For others, it may look like too many subscription services and parking fines. You won’t know what yours are until you spend some time reviewing your expenses.

But what about expenses you have to make — like filling your closet with a professional wardrobe for a new job? This may be more challenging to eliminate than your weekly budget on coffee.

Luckily, there’s usually a compromise. You may be able to limit how much you spend on a uniform or work outfit if you use these tips to build a professional wardrobe on a budget. Alternatively, you may be able to trim the fat in other areas of your budget, so the amount you spend on a professional wardrobe won’t have as much impact on your finances.

Don’t skip over this step if you don’t have many splurge items to eliminate

When living on a strict budget, you may not believe you have any expenses to eliminate. While your task is certainly more challenging, it isn’t impossible — even if you don’t spend money on clothes or takeout.

calculator and invoices

If you live paycheck to paycheck, you’ll have to direct your focus towards less obvious savings techniques. Rather than cutting out unnecessary expenses, you’ll have to find ways to reduce what you pay on the essentials, like:

Housing: As one of your biggest expenses, any change lowering your housing costs promises to have the biggest impact on your budget. Admittedly, this may be a hard one to change, as moving to a less expensive home will take time and money. However, the effort and upfront costs may be worth it if you’re able to move to a smaller home, find roommates, or relocate to a cheaper neighborhood.

Internet bills: The privilege of binge-watching Netflix can end up costing you. According to Move.org, the average American spends $42 a month on Internet. You may be able to lower what you pay by:

  • Reviewing your plan. Check to see if you can reduce your bandwidth without a noticeable downgrade in streaming quality.
  • Buying equipment. You may also find extra savings if you buy your modem and router rather than renting them for a monthly fee.
  • There’s also a chance you may be able to negotiate a lower fee for your plan if you’re a long-term customer.
  • Shopping around. If that fails, research your options to see if another company offers a better price.

Transportation: Getting around town can burn up a lot of gas money, as well as cash on maintenance and repairs. Check out our guide to see how you may reduce your commute expenses as well as budget for a trip to the mechanic.

Cell phone: Like an Internet connection, a smartphone is one of those luxuries of the modern world many people have. Unfortunately, it can be expensive. Not only are the latest flagships pushing $1,000, the average plan isn’t cheap. Avoid the temptation to buy a costly model like the iPhone XS Max, and check out these tips to lower your overall bill.

  • Change plans. If you rarely hit your monthly texting, talking, or data limits, you may be able to reduce your plan. Go online or talk with your carrier to see if there’s a plan that better fits your usage.
  • Change carriers. Don’t be loyal without a reason. If your carrier doesn’t provide the answers you need, shop around. You may be able to save up to $200 a month by making the switch to a smaller carrier.
  • Change contract styles. Ditch the plan altogether for a pre-paid alternative. This is a great idea if your carrier hits you with overage charges frequently. There’s no way for you to go over your limits since you’ll pay upfront for all talk, text, and data.

Banking: The average retail bank will charge anywhere between $7 and $15 every month for a basic checking account. Although small, these monthly charges add up. Transferring to a no-fee bank is a relatively simple way save up to $180 every year in these fees alone.

3. Organize bills

What are you left with once you eliminate unnecessary spending from your budget? Mostly bills.

You know it’s important to pay your bills on time if you expect to avoid late fees, reduce your interest, and maintain your credit score. But when these bills start coming and few (if any) have the same due date, it’s all too easy to lose track of what you owe and when. Taking the time to organize your bills this spring may help prevent a late or missed payment.

How to organize monthly bills you have to pay

Do you keep your paper bills in an unopened pile by the door, or do you prefer stashing them away in a drawer — away from prying eyes? Most organized professionals wouldn’t recommend these options. Instead, they suggest making a dedicated space for your paper bills like a mounted wall organizer, accordion file, or a desktop accessory.

empty envelope and pencil

Whatever you choose, make sure to put it in a place you won’t overlook. The “where” doesn’t matter as long as you’ll be able to see your bills clearly — whether it’s in your home office or in the kitchen. What’s important is you follow these steps when you organize bills:

  1. Open it! You may not like seeing how much money you owe, but this is an important first step to managing your bills.
  2. Remove any unnecessary fillers or envelopes sent with it, leaving only the statement or invoice and its return envelope.
  3. With a highlighter or pen, make note of the due date and money owed on the front of the return envelope, placing the bill inside until you’re ready to pay it.
  4. Place it in your organizer, making sure the bill that’s due first is on top.
  5. After you’ve paid a bill, remove it from this station and keep it in your files for a year.

someone checking emails on their laptop

Once you make this a habit every time you receive a bill, you’ll find it easier to keep track of all your paper bills.

As for electronic bills, we have some suggestions on how to organize your inbox with your finances in mind.

  1. Create a separate folder for your online bills in your inbox. It’s up to you how you want to organize this folder. You may want to break up into the months of the year so, for example, every bill in the month of April goes in one folder. Or you may want to divvy it up into specific bills so that each online bill has its separate folder.
  2. Forward your bill with a new title. Whenever you receive a bill in your general inbox, click the option to forward it to another user. Type your email in the address bar, then edit the subject to include the utility, the amount due, and the due date. For example, you would re-title a cell phone bill as AT&T, $85, April 31, 2019.
  3. Move it to the appropriate folder. When you receive this forward, you can move it to your bill folder.
  4. Mark any bills you have yet to pay as ‘unread’, clicking ‘read’ only when you’ve paid them.

How to keep track of bills

Just because your bills are organized doesn’t mean you’ll remember to pay them. To improve your chances of paying everything on time, you should make note of your due dates somewhere.

Although any type of agenda or pocket calendar will work, we recommend using an app so you can set reminders of upcoming bills. You can receive a notification when you need to pay your bill.

Automate your bills

Have you ever accidentally thrown out a paper bill along with an insert, or ignored a notification and forgot about a bill until it’s too late? If so, then you know there’s still a chance for a user error and you may miss a bill.

Automating your bills is insurance against these common mistakes. It’s a simple way to keep track of your bills. If your utility provider doesn’t offer its own online bill payment option, you’ll be able to set up pre-authorized payments with your bank.

Most banks give you the option to set how much you want to pay an approved payee. Once you arrange its withdrawal frequency, your bank will automatically make these payments on your behalf — even if you forget!

Make a bill pay checklist

For irregular bills or bills you pay manually, printing or copying out one of these bill pay checklist templates may help you stay on top of payments. It’s a simple visual reminder of your responsibilities, and you’ll be able to see if you still have to pay something with a quick look at your list.

Here at MoneyKey, we recommend devoting a window of time each week towards your bills. If you make it a regular addition to your schedule, you’ll more likely remember to sit down and pay your bills every time.

Once you have this system in place, you’ll be in the perfect position to catch up on any bills that fell through the cracks during the winter.

4. Toss out old financial documents

The bite of the spring cleaning bug usually coincides with tax time. As most Americans prepare to file their taxes, it’s the perfect time to throw out old statements and financial documents lurking in desk drawers, cupboards, and filing cabinets.

grocery receipt surrounded by groceries

Although you may be tempted to throw out everything all at once, resist the urge to start from fresh. There are some bills and documents you’ll need to keep for your records in case the IRS audits you. Not sure what merits keeping? Check this handy table to see how long you should retain common financial documents:

Item

Storage Length

Tax returns and supporting documents

The IRS recommends you keep any supporting documents for a minimum of 7 years after you’ve filed your taxes. Although it only has three years to perform good-faith audits, it has up to six years to audit you if it suspects you’ve grossly underreported your earnings.

Paycheck

Keep for a year until you can reconcile it with your W-2 form. If everything’s in order, you can throw out the year’s stubs after you file.

Investments and retirement plan statements

 

Keep these statements until you can confirm your annual statements are accurate. Keep annual statements for 7 years, as you may need to prove this passive income should the IRS audit you.

Receipts

Keep long enough to ensure they match you bank and credit card statements. For important items you may need to return, keep their receipts for longer in case you need to show proof of payment. If you’re using it to support your tax refund, then keep for 7 years.

Bank statements

Keep them for a month to ensure they’re accurate. If you’re using them as tax support, keep them for 7 years. 

Utility bills and credit card and

Keep for a month to ensure they’re accurate. Don’t throw them out until you receive the next month’s statements and bills acknowledging you’ve paid. The only exception is if you’re using them as tax support, in which case, keep for 7 years.

Personal loan contracts

Whether you have an active installment loan or settled a payday loan, you’ll want to keep your contract and any other proof you’ve paid your loan back indefinitely.

Insurance

Keep any record relating to insurance policies until they expire.

Wills, marriage licences, birth certificate

Keep these indefinitely.

Mortgage documents and house deeds

Keep these indefinitely.


Refer to our chart as you go through your files, and separate documents into two piles: the shred and keep piles.

Shred to protect your identity

Why do you need to shred documents that will just wind up in the garbage? Bills, bank statements, and cash loan contracts may show personal information, including your address, account numbers, and Social Security Number (SSN). This data is all that a criminal needs to file a false income tax return, open fraudulent bank accounts, and apply for payday loans or credit cards in your name.

By shredding obsolete documents before you place them in the trash or recycling, you’ll reduce the chances someone can identify confidential personal information from your old bills.

Set up a file system

smartphone with invoice on it

With the shredded paper bagged and ready to be thrown away, you’ll be left with just the keep pile which you’ll need to find a way to organize. Have you tried to find a bill in a messy pile of documents and records? It can be frustrating when there isn’t a system in place to help you locate what you need.

To cut down on your stress during tax time, organize your remaining documents into categories, grouping like with like. Each category should get its own labelled file folder. Place these folders in a dedicated drawer, box, or cabinet for safe keeping. The next time you need to find something, you can pinpoint it to a specific folder, reducing the time it takes you to look through your records.

Get cleaning this spring!

There are few springtime traditions as gratifying as the annual spring clean — especially when you tag on your finances to your list of things to do. It may take a lot of effort, but once all the hard work is done, you can sit back and relax knowing both your home and your budget are in order.

Ride that wave of satisfaction to establish new financial habits, like paying your bills on time and revisiting your budget often. These simple money management practices can help you keep things tidy all year long.

If you found these tips helpful, check out the rest of our blog for more practical advice. While you’re there, you’ll learn more about us here at MoneyKey. As a licensed lender of installment loans, payday loans, and lines of credit, we connect people with the cash they need. Remember this in case your spring cleaning reveals you don’t have enough savings to cover an unexpected bill — we’re here to help in an emergency!

 

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see MoneyKey's Terms of Use.

Posted in: Financial Tips Lifestyle

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