*This page is continuously updated as we write and publish new posts.
Did you land on this page because you’re worried about your money situation or confused about how you make the right financial choices?
Maybe you’re living paycheck to paycheck and just want to feel the financial stability of having more money in your bank account at the end of the month.
Or, maybe you’re spending is in check but you don’t have a system in place for tracking your money.
Not having a good understanding of your finances can be worrying and stressful.
Being in a poor financial situation can be even more stressful and harmful to your mental and physical health.
Money is a part of life.
Whether you hate money or love money, it is how almost all humans exchange goods and services.
For many of us, it feels like we never have enough of it and we’re always struggling to get more money.
But, at the end of the day, money is a tool that you can learn how to use to maximize your life enjoyment.
This page is here to provide you with a walk-through of understanding and organizing your finances so that you can improve your financial situation.
It All Starts with Mindset
Everything in life starts with your mindset.
Making the right decisions and taking advantage of opportunities requires knowledge and confidence.
Money is no different.
You have to have confidence in your ability to reach your financial goals.
Believe that you can accomplish something financially and it will become easier to achieve.
Read more in out post:
Improving You
Once you believe you can accomplish your financial goals, it’s time to create financial goals.
Personal finance does require calculations and numbers, but it also involves psychology just like anything else in life.
Sometimes the numbers can cause us to focus in the wrong area.
For personal finance, there are two main areas:
Making Money and Spending Money
If you’re coming up short with money every month, you may think the only thing that you can do is make more money.
It’s natural to think about needing more money instead because that allows us to not have to think about spending less.
You think: I don’t have enough money. I need to make more.
So, you look for ways to make more money.
But, you don’t have enough time to work at another job so you look for quick ways to make money.
These quick ways tend pay very little for how much time you spend doing the task to make the money.
Learn here about 5 Reasons You Shouldn’t Focus on Making Easy Money Online Fast.
Completing surveys online isn’t going to get you out of poverty or help you build wealth.
If you truly need more money to accomplish your financial goals, it’s better to focus on improving your skills and knowledge.
The exchange of money is always for something of value.
Anyone can fill out a survey so it’s not as valuable as other skills or knowledge.
But, before you spend time figuring out how you can create value for more money, you should look at your own spending.
It’s a lot easier to change how much you spend than how much you earn.
When you start to put as much importance on spending money as earning money, you can start to make big changes.
Now time for the numbers and how to figure out how much you’re spending and where you’re spending money.
Tracking Your Income and Expenses
Organizing and understanding your financial situation starts with reviewing a few different aspects of your finances.
First, the day-to-day stuff.
Your income and expenses.
Or, the money you make and the money you spend.
You have to collect all of your financial transactions before you can know your financial habits.
With all of the different types of financial accounts from bank accounts to credit cards to peer-to-peer payment apps, your transactions are typically in different places.
You have to put all of these transactions together.
Learn more on how to track your income your income and expenses.
Categorizing Expenses and Other Transactions
Once you’ve gathered your financial data, it’s time to categorize it.
There are some many different ways to categorize your spending and earning.
And, since everyone is different and has different spending habits, it creates even more ways to categorize your spending.
Learn how to categorize your expenses.
Once you’ve put all of your financial transactions in one place and categorized them, you can see where your money is going every month or quarter.
You can even create a personal income statement with this information.
This information can also be important for creating a budget.
You can see how much you spent and set a reasonable goal for how much you want to spend in the future.
Create a budget
After you learned about your spending habits, it’s time to create a budget.
Where are you comfortable spending?
Where do you want to spend less so that you can save more money?
There are so many different ways to think about and create budgets.
First, check out our posts on what is a budget and simple budgeting for beginners.
Then, check out our posts on budgets:
- What is a monthly budget?
- What is the 50 30 20 budget?
- 5 Reasons You Should be Using a Quarterly Budget
At this point, you know how much money has been coming in and going out and you’ve set expectations for both in the future.
Now, you need to know where you put that extra (or lack of) money.
Creating a Personal Balance Sheet
Another financial document for financial organization and to understand your money situation is the personal balance sheet.
With this, you’ll take note of all of the stuff you own and all of the money that you owe.
Learn about what is a personal balance sheet and how to create it.
Essentially, once you have a personal balance sheet, you can calculate your net worth.
You net worth is your wealth.
Tracking Your Progress
You can use your financial statements to track your financial goals.
Learn some reasons why a personal balance sheet can keep you motivated.
Next Steps
By following the steps in this guide, you’ll have some basic information about your finances.
With a budget specifically, you have a short-term view of your finances.
The next steps will be deciding what to do with your extra money in the short-term.
That means paying off debt, investing or both.
If you have a financial goal to pay off debt, check out our posts on conquering debt.
After you’ve organized your finances, understand your financial situation, and created a plan for paying off debts, it’s time to create a plan for building wealth.
This is for long-term stuff like where you’ll be in 5 or more years.
Check out our posts on building wealth.
