Financial Organization: 9 Steps to Completely Organize Your Finances Like a Pro

A couple discusses financial organization options to reach their goals.

When you think about the financial details of your life, what comes to mind? Do you know how much you have in savings, how much you bring home each pay period, and how much you owe? Or, do you draw a blank, unsure of how much you have coming in, how much you have saved, or even where those savings accounts are housed?

If your answer is the latter, getting your finances organized can seem like a major undertaking, which might be why so many people avoid doing it. But the benefits of financial organization far outweigh the hassle. For one thing, when you get your finances in order, you’re able to set goals and work toward them. You’re also able to figure out where you can make changes and how those changes will affect your life, financially and otherwise.

The trick is to break down the undertaking into manageable stages. Focus on one area of your finances at a time, and you’ll eventually be able to get everything in order. Here’s how you can get started.

1. Create a Budget

When you create a budget, you essentially make a plan for spending and saving each month. You determine how much money you earn monthly and where that money goes. If you have additional money left over after you pay for your needs, you can use your budget to decide how to spend the extra cash, whether saving it, putting it toward your debt, or spending it on a hobby or other non-essential.

Some of the benefits of budgeting include:

  • Setting goals and prioritizing your finances. With a budget, you can easily see how much you can contribute to a specific goal each month, and you can map out exactly how long it will take you to achieve it. You can also use your budget to focus your spending on the things that matter most to you.
  • Having an accurate understanding of your financial situation. Before creating your budget, there’s no real way to know how much you spend each month and how those expenses compare to your income, which can make planning for the future difficult.
  • Getting the opportunity to change bad habits. Creating a budget can be an eye-opener for some, as it clearly details where their money has been going. For example, you might not realize you’ve been spending $50 per week on coffee until you review your spending habits. When you have a budget, you can either decide to continue to spend that much on coffee or cut back and put that $50 toward something else.

Creating a budget does require a bit of preparation and planning, but it often isn’t too difficult. There are a couple of steps you can take to ensure your budgeting process goes smoothly.

  • Step 1. Calculate Your Monthly Income and Expenses

To create a budget, you need to know how much money you have coming in and going out.

First, you want to figure out how much you bring home during a typical month. If you have a job, you can look at the net payment amount on your paystub to see how much you actually bring home in a month. You’ll need to add up the monthly totals of each of your paychecks if you’re paid more than once a month.

Next, add up the total amount of your monthly expenses. You can review your bank and credit card statements to see how you spend your money each month. Your statements can also give you an idea of any irregular expenses you have, such as a quarterly car insurance payment or biannual tuition payment.

Now that you have an income amount and an amount for your monthly expenses, it’s time to compare the two. Ideally, your income will be the same as or more than your expenses. If your expenses are higher than your income, that means you’re spending more than you’re earning and might end up in debt.

  • Step 2. Determine Your Fixed and Variable Expenses

The next step in budgeting is to create categories for your expenses and assign a value to each one. Some people find that it helps to separate their expenses into fixed and variable categories.

Fixed expenses typically include:

  • Mortgage and rent payments
  • Insurance payments
  • Loan payments
  • Subscription service fees
  • Some utility bills

Variable expenses typically include:

  • Groceries
  • Clothing
  • Transportation costs
  • Meals outs
  • Entertainment
  • Some utility bills

Fixed expenses are often the easiest to budget for — simply record how much you spend on them monthly. You might have to use a bit of guesswork when figuring out how much to budget for variable expenses. Looking back over your statements, however, can give you an idea of the average amount you spent on clothing, groceries, and other variable expenses over the past few months. You can use that average as a starting point and adjust as needed.

Once you know how much your variable and fixed expenses are, or are likely to be each month, you can make adjustments. For example, if you have debt you’d like to pay off, look for expenses to cut back on, then direct that money to your loan payments. The same is true if you’d like to save more, whether it’s for an emergency fund or retirement.

Remember that a budget isn’t written in stone. You should adjust your budget as your goals and situation change. For example, if you get a pay raise or pay off debt, you can work those changes into your budget and find another use for your excess funds.

Once you’ve got a budget in place, you can turn your attention to other areas.

2. Pay Yourself First

Even with a budget in place, it can be challenging to stick to it and to work on your savings goals. Let’s face it — putting money aside for a rainy day just isn’t as much fun as going on a weekend getaway, enjoying a night out with friends, or purchasing a stylish new outfit. Before you know it, though, the money you meant to set aside for your emergency fund, down payment, or other savings goal, is gone.

One way to “trick” yourself into setting money aside is to pay yourself first. When you pay yourself first, you choose an amount you can comfortably set aside from each paycheck and set up a direct deposit of that amount. Instead of landing in your checking account with the rest of your pay, the amount you want to save gets safely diverted into a savings account. After you’ve set up the direct deposit, you don’t have to think about it again. Over time, you can build up your emergency fund or work toward your other financial goals with little, if any, friction.

3. Track Your Spending

You have a budget in place, and you’re setting aside money for savings each month. The next step is to keep track of your spending. Doing so will give you a good idea of where the remainder of your money is going, and you can make sure you stay on track to reach other financial goals.

There are a few ways you can keep track of your spending each month:

  • Download an app. There are numerous budgeting and financial management apps that connect to your credit cards and bank accounts and automatically record and categorize each transaction for you. You can log into the app to see exactly what you’ve spent throughout the day, week, or month.
  • Use online or mobile banking tools. Gone are the days when you had to wait to receive a paper copy of your bank statement in the mail. Now, you can use digital banking tools by logging into your account on your phone or device to review your spending. These tools also often let you keep track of savings and schedule bill payments.
  • Use pen and paper to track your spending. Technology helps to automate the process of tracking your spending, but some people prefer to write down their purchases and expenses by hand. Doing so can help you feel more connected to your spending and more aware of where your money is going each month. If you make a lot of purchases with cash, using a pen and paper might be the most convenient way to keep track of spending.

Tracking spending doesn’t just help you avoid going over your budget. It can also give you a more realistic idea of how you use your money each month. After tracking your spending for a month or two, you can go back to your budget and make adjustments to make it more accurately reflect how you’re living.

4. Shop Smarter

Getting your finances in order doesn’t just mean determining what’s going where and how much you want to save. It also means finding ways to make the most of your money when spending.

Shopping smarter can mean any of the following:

  • Comparing prices. Thanks to the Internet, it’s pretty easy to compare prices. Just type the name or description of the item you’d like to buy into a search engine, and you’ll likely get multiple results from several retailers.
  • Using coupons. Like comparing prices, using coupons is easier thanks to the Internet. You can download digital coupons and print them out — no more waiting for the weekly flyers. Some stores also offer digital coupons you can load onto your loyalty card. When the cashier scans your card at checkout, the coupons get deducted from your total automatically.
  • Waiting for a discount. Eventually, almost everything goes on sale. If you can, get to know the sales cycle at your favorite grocery stores. That way, you’ll know when the things you buy most often are most likely to be marked down.
  • Exploring less expensive options. Sometimes, small changes can lead to significant results. Choosing the less expensive option, such as the store-brand pasta over the name brand, can lower your grocery bills. Other small ways to choose the less expensive option include brewing coffee at home instead of buying it from a cafe, drinking water from the tap instead of bottled water, and switching from cable to a streaming service.
  • Shopping alone and on a full stomach. Although a friend or two can provide great advice, they can also be a bad influence, encouraging you to spend more than you planned. Make shopping a solo activity, and you’ll be less likely to spend more than you intended. Also, whether you’re shopping for groceries or clothes, you’re more likely to make snap decisions if you’re shopping while hungry. Have a meal or a snack before you shop so that you aren’t tempted to buy what’s not on your list.

5. Build Good Credit

Your credit score is a three-digit number, usually ranging anywhere from 300 to 850, that can determine whether or not you get approved for a loan, whether or not you get the best rate on that loan, and the spending limit on your credit card. Credit isn’t something you’re born with. It’s something you have to build up.

However, five factors typically influence your score. They include:

  • Payment history. Payment history accounts for the largest portion of your score. If you pay your bills on time, all of the time, you’ll be able to boost your score.
  • Amount owed. How much you owe compared to how much you can borrow influences your credit score. The less you owe, usually the better your score.
  • Length of credit history. How long you’ve had credit also affects your score, as well as the average age of those accounts.
  • Credit mix. The combination of installment and revolving credit accounts you have impacts your score.
  • New credit. If someone’s done a hard pull on your credit in the past year, it will impact your score.

Building good credit can seem like a challenge, as it’s often a bit of a catch-22. In some cases, it might look like you need to have already established credit to get credit in the first place. However, there are ways to build your credit from scratch. Depending on your circumstances, your options for building credit include:

  • Having someone add you as an authorized user their credit card. If you’re just starting out, one way to build up your history and score is to have someone, such as a parent or spouse, add you as an authorized user on their credit card. If you decide to go the authorized user route, keep in mind that there are risks involved for both parties. The person who’s the primary cardholder can end up being on the hook for the debt you rack up. Additionally, if the primary cardholder doesn’t pay their card on time or racks up a lot of debt, then there’s the risk that it will negatively impact your own credit report and score.
  • Opening a secured credit card. Some types of credit cards are designed for people with limited credit histories or with a history of poor credit. A secured credit card requires a deposit from you, which serves as the collateral on the card.  We offer a share-secured Visa® with no application fee and a low $500 minimum deposit.
  • Taking out a student loan. If you’re going to school or going back to school, student loans may feel like a necessary evil. However, there is a bright side – taking out a student loan could be a way to establish credit history. Most types of federal student loans don’t require a credit check and can be a viable way to start building credit. Just remember, these won’t help improve your score greatly until you begin repayment and demonstrate a habit of on-time payments.
  • Keeping your spending under control. How you use your credit card can also help you build credit. The less you spend on the card in comparison to its spending limit, the better. Try to keep your spending to less than 30 % of the limit on the card. Only charge as much as you can pay off in full each month to avoid paying interest and to keep your spending in check.
  • Paying your bills on time. Another important factor that will help you build up your credit is paying your bills on time. A late payment can stay on your credit report for up to seven years.
  • Keeping accounts open. If you no longer need a credit card, it may seem like a good idea to close the account. But the length of your credit history also influences your credit score, so it may be a better idea to keep older accounts open, unless you’re paying a hefty annual fee.

6. Get Your Debt Under Control

Debt can be a downer, but it doesn’t have to control your life. If you have debt, organizing your finances can help you determine the best way to tackle it and pay it off. Tactics to consider when attempting to minimize your debt include:

  • Consolidating loans. If you have more than one loan, such as multiple student loans or a student loan plus a car loan, it might be worth consolidating them into a single loan, especially if you can get a better interest rate or a lower monthly payment. Another benefit of consolidating your loans is that you end up with a single monthly payment, rather than two or more.
  • Trading high-interest debt for low-interest debt. If you have credit card debt, a balance transfer might help you get a lower interest rate. Balance transfer cards often let you move the balance from one card with a high interest rate to a card with a low introductory interest rate. You’ll end up paying less over time, which can help you get out of debt sooner, but you need to watch for high balance transfer fees that can negate this savings.
  • Putting together a payment plan. Whether you decide to consolidate your loans or not, having a plan for paying them off can help you get your debt under control. Set a target date for when you’d like to be debt-free, then calculate how much you’d need to pay every month on each loan to help you reach that goal.

7. Save for Retirement

After you’ve planned for paying down debt, created a budget, and determined your typical monthly expenses, it’s time to start saving for retirement. How much should you be saving? It all depends on your current situation and your retirement goals, but somewhere in the neighborhood of 10 to 15 % of your monthly income is usually a good place to start. If you don’t have 10 to 15 %of your income available, begin by setting aside what you can and make sure to take advantage of any employer matches.

Your retirement account options can vary based on your employment situation. Some employers offer 401(k) or 403(b) plans, but others don’t. If your employer doesn’t offer a plan or if you’re self-employed, you can open an individual retirement account (IRA) to start saving for retirement.

It helps to use the “pay yourself first” method mentioned above to get started with retirement savings. Choose an amount to save each month or pay period, then have that amount automatically taken from your paycheck if your employer offers a plan or have the money transferred to your account if you’re saving in an IRA.

8. Organize Files

Another important piece of getting your finances in order is to organize your paperwork. It’s important that your financial paperwork and documents be kept in a spot that’s easy to access and secure. You can get to it when you need to, and it’s safe from prying eyes.

You can organize your files using physical copies or digital versions. If you keep physical copies, it’s a good idea to store them in a fireproof, locking filing cabinet or a secure spot such as a safe-deposit box.

If you’re going to go the digital route when organizing your documents, make sure you have a backup of your files, using a USB drive or external hard drive. Keep the backup in a secure location at home.

A few of the files you’ll want to sort and organize include:

  • Tax returns and other tax documents
  • Estate planning documents/wills
  • Insurance information
  • Medical records
  • Mortgage paperwork or the deed to your home
  • Bank and credit card statements
  • Other loan paperwork or documentation that you’ve paid off your debt
  • Proof of ownership for your car and other high-value possessions

9. Work with a Financial Institution That Has Your Best Interests at Heart

Here’s one last piece of the puzzle when it comes to organizing your finances: Find a financial institution that’s going to look out for you. Unlike banks, credit unions are member-owned, which means they’re committed to serving the best interests of their members.

When you join PSECU, you can take advantage of the following:

We provide products, services, and resources that help our members make their wallets work for them. To learn more, visit, and be sure to check out our digital banking tools.

Financial Organization: 9 Steps to Completely Organize Your Finances Like a Pro

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.