Can organisation save you money? It surely can. Most of the financial advice out there includes being organised and doing your research. Even if you have an excellent financial adviser, you won’t be able to achieve the goals you set for yourself with this professional help, unless you stay organised.
In day to day financial transactions, being organised can help you avoid many penalties and charges — like late-payment charges or reconnection fees for utilities. But being organised can also help you recognise your financial picture and know where you stand financially at any given point. So when you’re hit by an emergency, you’re interested in making a major purchase, or you’re planning for an upcoming major life event, your decision is based on more than just having the money now to pay for it or getting credit.
So how could you get organised financially? Making a budget is always a good start to know your income and expenses. You also must plan a periodical review of your investments, if you have any. Keeping tabs on your credit card balances and making sure you’re not accumulating debt can keep you within your means.
Plan for the future
Other steps that you can take to stay ahead of any crisis is looking at potential future events that could require extraordinary spending either for a limited time or on an ongoing basis. An example of a limited event is a wedding, a funeral or an expensive trip. For these events, it is important to have some plan, when the situation is predictable, for how you will pay for it. For many people, taking a personal loan could be the answer. It is important to make sure that you will be able to afford the monthly payments afterward.
Other events can have more of an ongoing effect. For example, having a baby could cost a bunch of money initially for delivery, preparation, clothes, etc. But it doesn’t end there. A baby will add costs that could be on an annual basis more significant than the initial costs. Day care, food and doctor visits can add up quickly. If you’re getting a personal loan for the initial costs, think of how you will manage the monthly payments along with the extra baby costs. The answer could simply be in cutting back on other spending. This is where you must identify the expenses that can be realistically be scaled back.
Foreseeing events that could strain your budget is smart and can pay off. It is simple planning, which is likely to reduce the stress associated with many major life events. In addition, knowing how much you can afford can guide through the process — from selecting what you buy to paying off the cost without falling into debt.
Don’t settle
Always review your expenses even when they appear to remain the same. Periodical review of your ongoing expenses can help you find regular increases that you were not aware of, or expenses that could be eliminated.
You also will be able to see the patterns of your spending along with schedules of payments. For example, you may find that when you have many payments coming up, you tend to reduce your discretionary spending. Conversely, when you have available cash in the bank, your spending goes up — regardless of how this cash may be needed later in the month.
The solution could be simply spreading your bills across the month, or changing your spending habits, if possible. The bottom line is the more organised you become in handling your money, the more opportunities you will have in savings or channelling your income into more needed areas. Financial planning does take care of itself. You must be proactive to have a solid plan.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Getting organised
Stay on top of your daily transactions and bills
Plan for major purchases and life events
Think of how to accommodate new expenses and payments
Regularly review your expenses
— R.O.
