Sunday, September 25, 2011

Keep on top of your money

Back in May 2009, I came up with a "Tweet" of a Financial Plan - Control debt. Review insurance to protect lifestyle. Monitor spending. Save. Be tax smart. Develop & audit plan. Update will. Review planRecently, I saw an article in the Toronto Star - Improve your finances in just 30 minutes.

Both can be summarized the same way - be organized, have a system in place and stick with it. We'd all like life to be easy and not have to think about money and the "what ifs", but unfortunately, that's not reality. So the real question is how do you take care of your finances for both the planned and unplanned expenses in life without the planning getting out of control.

The system I recommend is to set aside some time every week or month to do these tasks. When you receive your mail, put all of the financial related items into an envelope or file folder. Similarly, take all the receipts out of your pockets and wallet and put them into the envelope as well.

Sit down regularly to go through this package and to ensure:
· There are no mistakes / unexplained charges on any of your bills
· Have a file folder for receipts you need to keep - items you'll declare as expenses on your taxes, warranty items, bills for repairs, etc.
· Once you've matched receipts to your bills for items like groceries, discard them

I use software to keep track of my expenses. I download my statements directly from my financial institutions and categorize everything. This way, at tax time, I can run a report and have summary numbers for all of my expenses.

At the same time as you are reviewing your statements, pay your bills. Most on-line banking systems let you date a payment for the future. If you pay by check, write it out and have it ready for when you want to send it out.

At the same time, set up a monthly rotation to review ongoing expenses such as your home and car insurance, life insurance, saving plans (RRSP, RESP, TFSA, etc), budget, etc.

Using a system ensures that you use a minimum amount of time for these tasks, and that you don't have to worry again.