Saturday, January 15, 2011

8 Steps To An Organized Financial Life


I am re-posting this article from Investopedia because I am doing a study on the effect of lack of organizational skills on the finances of a person particularly for people who have serious issues on paying attention and staying organized. I believe education is the best equalizer and I know one day there will be more financially literate Filipinos if we continue promoting financial literacy. That change of course will have to start with me.

Investopedia depicts itself as "Your Source For Investing Education. Includes the most comprehensive investing dictionary on the web". And so I would like to share this slide presentation I read from Investopedia, about having an organized financial life this 2011.

According to Wikepedia as described in their Facebook page,

"Investopedia is one of the Internet's largest sites devoted entirely to investing education. The site was started by Cory Janssen and Cory Wagner in June 1999 at the height of the internet stock boom as an unbiased source to learn about investing. Based in the city of Edmonton in Alberta, Canada the site has grown to become a well-respected source for financial information. In 2007, the site was purchased by U.S. publishing company Forbes, who sold it to ValueClick in 2010.

Content
The website had its beginning as a financial dictionary, separating itself from other dictionaries by offering the "Investopedia Says" feature—a plain English interpretation of hard to understand terms and concepts. The site now averages over 2.5 million page views a month and is home to over 1,500 articles, 8,000 dictionary entries, and 750 pages of tutorials on nearly every aspect of finance and investing.

Simulator
Along with educational content, Investopedia also offers interactive tools such as its popular stock market simulator, which allows individuals to set up a brokerage account with imaginary money and trade publicly traded stocks and options on the NYSE, NASDAQ and other stock exchanges.

Stock Analysis
Investopedia also publishes upwards of 10 stock analysis pieces per day. These pieces are written by a number of different authors and offer analysis and buying advice on stocks from all sectors. In addition to this, Investopedia sometimes offers forex analysis, with pieces being published that analyze different aspects of the foreign exchange market."

8 Steps To An Organized Financial Life from Investopedia

Lack of organization can harm your finances as much or more than being short on cash. Losing bills can lead to late fees, and not keeping track of your bank account could cause overdraft fees. The following are some tips that will help you stay on top of your bills and accounts, and will lead to greater organization and, most importantly, less spending.

Author's comments: This statement is supported by financial gurus like Alvin Tabanag, Bo Sanchez, Robert Kiyosaki, and many more.

Step 1: Pull Out Your Budget At Least Once Per Month
Your bills could change on a monthly basis. Revise your budget as bills come in and adjust other expenses to make up for it, so you don't accidentally overdraw your bank account. For instance, some months and seasons bring higher electrical bills than others.
What if you don't have a budget? Create one today! Start by writing down your budget the way you'd like your expenses to unfold. At the end of the month, start tweaking your budget by adjusting other expenses when one expense is more than you expected.

Author's comments: I actually did this at the start of this month because after learning how to modify my planner using the Franklin Covey way. To learn how to help your daily, weekly, monthly and yearly goals you may contact Mr. Jeric Lee, financial planner and business man via 09178577938.

Step 2: Use Financial Software
Financial software isn't just for investments. You can find free, scaled-down financial software on the web to help you keep track of your daily expenses. Within the programs, you can get detailed information as to where your money is actually going. When choosing budgeting software, verify on the Better Business Bureau website that the service you consider has good customer service records.


Author's comments: I actually do not have any financial softwares but I do have montly updates of stocks, investments, audio books, pdf books from one of my financial success mentors, Mr. Bo Sanchez and the Truly Rich Club. To get more information on how the Truly Rich Club can help you, visit them at: http://www.bosanchezmembers.com/amember/go.php?r=11497&i=10

Step 3: Have One Place For Bills

Even if most of your bills arrive electronically, you still need a place for bills that come by mail. For storage, keep your bills wherever you normally write checks or pay bills online. Throw out bills once they are paid, preferably after shredding them for privacy and identity theft protection. You can also keep scanned copies in your computer. If you don't like filing bills by hand, scan them and save a copy in file format. Give the file a name that says exactly what the bill is and keep all bills in a file labeled:

Author's comments: I actually practice this since last year. All my bills are in one folder and they are arranged with the most recent on top. For those I need to pay, they are displayed on the corkboard beside the door of my room so I am always reminded that there is an outstanding bill. When there are concerns about payments, rewards points or anything I want to ask about my bill, I just look at the history of my bill so I can clearly bring it up to the concerned party. This kind of organization has made my life very organized and manageable.

Step 4: Open Bills and Pay Them the Same Day

If you have money available in your bank account and you don't have other debit card or bill pay charges coming through that could cause an overdraft, pay your bills the same day they are received. Pay extra attention to paper bills that normally come electronically. You don't want to pay a bill twice because you received a duplicate by mail. Always call your creditor when a paper bill arrives when you think you have an automatic payment scheduled or electronic billing set up.

Author's comments: I am enrolled to online payment via BDO bank services. I can say I practice same day payment but not paid immediately. Let me explain what I mean. If let's say my credit card payment is due on the 30th and I received my credit card statement on the 20th then I schedule the payment on the 20th or the nearest possible time on the 30th. That way, I paid on the same day to be scheduled on the day I am supposed to pay. Saves me the time to remember to pay for the next ten days but at the same time my cashflow is not deducted to early that when it is supposed to be deducted.

Step 5: Have A Checklist For Bills You Are Expecting

Neither mail nor email is perfect. Create a checklist at the beginning of the month with every bill you are expecting. You can keep it on your desk, bill paying area or create a file on your computer. What's important is that you are aware of what bills you are responsible for paying at any given time.

Author's comments: I have a checklist of bills to pay in my planner.


Step 6: Consult With Anyone With Whom You Share Accounts

Whether it's your spouse, significant other or relative, you can easily bounce a check or debit card payment if you don't know how much the other has been spending

Let's say your spouse has the day off and decides to go to lunch and golfing with a buddy. When you get home, you're told about a great game of golf. What you're not told is the $150 spent amidst day-off festivities. You end up bouncing a direct-debited student loan payment because your bank account had less in it than you thought.

Author's comments: My husband and I have our own personal banks where we get the funds for our personal needs and a conjugal accounts where finances involving the two of us are placed. For personal needs, we do not ask each other for our expenditures unless its really big let's say P10,000 and up. But for finances involving our conjugal account even transfer of funds worth P1,000 are discussed.

Step 7: Verify That Your Paycheck Is Direct Deposited

If you have direct deposit, you get used to your paycheck being there on paydays. However, sometimes your check may not arrive electronically on the correct date. It only takes a moment and can save a lot of financial stress and confusion. Don't start spending your paycheck until you've checked your account balance.

Author's comments: Amen. Do not spend money you do not have. Freeze that credit card.

Step 8: Have Two Bank Accounts

Use one account for spending. Use one for bills. This way you can prevent yourself from accidentally spending bill money on a night out that should have gone towards rent. It may take a little extra accounting to maintain the two accounts, but in the end you'll be more than likely glad you made the change.

Author's comments: This I have been practicing for a year now. My spending account is in BDO since this bank is so accessible with ATM machines in every corner and they also have the longest banking hour, mall banks and electronic banking as well. The other one is BPI Direct for my savings because they have the highest savings interest rate amongst commercial banks compared to other banks (except of course for rural banks) at 1.375 per annum.

To get more information about BPI Direct Savings, you may visit: http://www.bpidirect.com/

To get more information about BDO Services, you may visit:

http://www.bdo.com.ph/personal.asp


Conclusion
Missing bill payments because of lack of organization is the easiest financial problem to fix. You don't have to use all eight of these tips, as long as you pick an organizational system that you can stick to every month.

To read the original article in Investopedia, please visit:
http://www.investopedia.com/slide-show/8-steps-organized-financial-life/default.aspx

You can also get several financial tips in Investopedia at:

1 comment:

  1. Thanks for sharing this article. Im also doing a project related to this area. This is a good resource. Keep this blog up.

    Allen Sawyer
    Credit Card Machines

    ReplyDelete