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Seven-step guide to organising your financial life

Last updated on: August 11, 2010 19:37 IST

Seven-step guide to organising your financial life

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Kunnath Santosh, Perfios.com

Is chaos the first word that pops into your mind when you think of your finances? Take these seven steps to straighten out your financial life and regain control over your money...

Life's fast and 24 hours are so not enough these days. In between career, kids and commute, you have little time to think about reviewing your finances, let alone actually planning them. So, the bills pay themselves and your financial life follows its own course. While that's understandable, it's not advisable. Letting fate take over your finances may land you in some uncomfortable situations. Here's a seven-step guide to organising your financial life.

1. List your expenses

At the beginning of every month, make a list of the expected expenditure for that month. When that expenditure is done, tick it off. If one thing cost more than you expected it to, you will be able to tweak other expenses to stick to your budget.

Moreover, it's a healthy habit that will help you keep your finances under your control at all times and budget for investments into your dreams and your future.

The author is co-founder and director of Bangalore-based Perfios Software Solutions Private Limited. www.perfios.com is a personal finance software solution that provides a 360-degree view of your personal finance, with very little manual intervention.


Photographs: Uttam Ghosh
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2. Ask for detailed credit card bills

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Many credit card companies these days offer you a detailed bill that shows you how much you are spending where -- bill payments, retail, eating out, entertainment, travel, and the like.

This can be monthly or yearly, depending on your credit card company and generally comes free of cost. The detailed bill can tell you where your money is going. This is especially helpful when your credit card has add-on cards for family members. While

you may know your expenditure pattern, it's hard to keep tabs on what others are spending. As the one stuck with the bills, you need a detailed bill to keep you in the loop.



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3. Organise bills

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Nowadays, a lot of us have replaced paper bills with electronic ones. And so you can't really tack them on a refrigerator. What you can do is create a folder on your computer by the month and save copies of all bills for that month in it.

Set reminders for bill payments so you don't miss the due dates and end up paying penalties. By creating month-specific folders, not only will you know how much is to be paid when but will also be able to pull out past information later should you need to.

Do remember to save the payment information, too, especially if your bills are paid online, in the same folder.



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4. Have multiple bank accounts

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It might be easier to keep tabs on one bank account but having two bank accounts is a better way to get organised. This is because you can use one bank account for savings and investments and another for monthly expenditure.

Every month, transfer the expected monthly outgo into the expenditure account and not a penny more. Forget you even own another account and watch your savings swell.

This way, you will have to track only one account and a quick mini statement will tell you all you need to know about your outgo in a particular month.



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5. Handling joint accounts

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It's tricky to handle joint accounts, more so when one hand doesn't know what the other hand is doing.

Make sure you are clearly in the loop about how much the other accountholders are spending from a joint account. This will ensure checks don't bounce and nasty surprises don't come your way.

A better way would be to keep one separate bank account in addition to the joint one to make individual payments. Also communicate any big spend before making it to those who share an account with you.

Encourage them to do so, too. Communication is the key not just in marriages but also in joint finances.



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6. Keep tabs on investments

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Besides storing details and proof of your investments carefully, do make it a point to stay updated on latest developments in the plans you have chosen.

If you have invested in equities, check share prices regularly even if you are a long-term investor. Ditto for mutual funds.

Create a document with details of your investments and their maturity dates. Also don't forget to nominate a beneficiary whenever you opt for an investment plan. Do let your beneficiary know where you have stored the details. Should anything happen to you, this will help spare your beneficiary a lot of pain.



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7. Seek professional help

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If you still can't get your financial life organised, get professional help periodically. Hire a chartered account to sort out your finances and streamline your tax payments, expenditures, investments etc. The price of hiring an accountant is much less than the price of losing control over your money.

It's easy to get lost in money and its matters. Getting into the habit of staying organised can help you cope better with emergencies and spare you surprises you can do without. Do it, now!



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