10 Ways To Get Financially Organized (Frugal Pastor—Part 1)

Tuesday, February 13, 2008

Before our marriage Lisa and I decided that I would do the checkbook. Big mistake. Three months into our marriage I had screwed it up so bad that I took it to the bank and asked a teller to help me unscramble what I had done. Two and a half hours later she said, “Let’s just close this and start over.”

Today my tax guy says I’m the most over-kill organized guy he does taxes for. To me, becoming a frugal person begins and ends with organization. I don’t think it’s possible to maximize your finances without becoming slightly anal. I’m sure you probably already do most of these, but here are TEN ways to go from checkbook nightmare guy to H&R Block customer of the month.

1. Set up “Financial central” somewhere in your house. Pick a place in your house, set up a desk and computer, and make that the place where you immediately place incoming bills for payment, etc. For me it’s my home office desk in the basement.

2. Create an “incoming bills to be paid” file on your desk. Everyday when something new comes in I file it. I have a simple three-section file I got from Staples and have divided it into first pay period bills, second pay period bills, and misc.

3. Buy Quicken 2008. Like yesterday. A number of years ago I switched from doing the checkbook by paper to doing it on my computer. My financial organization quadrupled. Instead of hours, I now spend minutes doing our finances. Quicken is set up to look like a checkbook and is so simple that, well, I can do it. You can set up a budget, print reports, etc.

4. Automate your bills. Every single on-going bill I pay, including my tithe, is done through automatic withdraw. Doing so saves time and postage. I have created a “Bills Due Schedule” and check off each bill I pay on which pay period.

5. Take 10 minutes a day, every day, to reconcile your checkbook. Every morning I gather our receipts and enter them into Quicken. There is an “update” feature in Quicken which automatically reconciles your computer ledger to the bank. I know what I have in checking to the penny, every single day. Each transaction is labeled and linked to my budget. Every morning I take a post-it and write down how much is in checking and stick it on the top of the checkbook for Lisa to see.

6. Create file folders for all your receipts. Once a year, every year, I create new files for all my receipts – “2008 Debt – Mortgage” or “2008 Housing – Electric”. They are stored in my desk. Every expense I have has a corresponding file in which that receipt goes. Each time I pay a bill I put that receipt in its file folder. Years ago I used to just throw receipts into a big plastic tub and spend years trying to find receipts to return stuff and prepare for taxes.

7. Print your budget vs. expenses each month and discuss it with your spouse. At the end of every month Lisa and I look at our Quicken budget income vs. expenses budget report and talk about how we can improve the next month and what bills we have coming up. If you’re married, like in everything else, communication and common planning is vital for staying organized financially.

8. Find a great tax person. My tax guy saves me thousands of dollars every year. No joke. I used to brag that I did my own taxes and then realized that my tax situation was becoming too complex. Little did I realize that if I had started using a tax professional years prior, I would have saved even more money and had been vastly more organized. I’ve learned that to become frugal you have to think monthly quarterly and annually, instead of weekly. A great tax guy will help you plan your year, prepare/save for any taxes owed, and as a result give you piece of mind. If you are confident your taxes are so simple that you won't save any money by using a tax professional, I'd still use a program like Tax Cut.

9. Get a will. Do you have one? Is it up to date? One inexpensive option is to get Willmaker 2008. It will walk you through the creation of your will, and once done you can get it notarized and filled appropriately. Willmaker will also walk you through designating your final healthcare wishes, funeral arrangements, etc. Simply put, if you don’t have a will that takes care of your kids and property after death, your lack of organization will hurt those you love severely. Get Willmaker. Contact a lawyer. Something is better than nothing.

10. Create a Balance Sheet. Every accountant and business type knows what a balance sheet is. It is a statement that shows your financial position. It is a listing of all your assets (money in saving and equity in property owned) minus your liabilities (all debts to be paid). What’s left-over is your family’s net worth. I think one of the keys to getting and staying organized is creating a balance sheet that you update once a quarter. True wealth is not your lifestyle (houses, cars, vacations, clothes, clubs), but your net worth (what you would have in the bank if you sold everything and paid off all your debst). If you don’t see your net worth go up quarter after quarter, you aren’t building wealth. Keeping that target in mind at all times is a great motivation to becoming more frugal.

On Monday I saved $40 in coupons at the grocery store. I’m taking that $40 I saved and putting that directly into savings in my ING Direct account online. 15 minutes of coupon clipping saved me $40 which will earn me 3.4% interest in savings. That simple act of cutting coupons and saving $40 added $40 to my net worth.

Live frugally. Give generously. Live well.

Brian