Money Mechanics

DSCN1787Getting into a better place with your money is about mindset and mechanics.  As you know, I focus on the mindset piece because it’s the piece everyone likes to “step over”, and it’s truly crucial to really being effective with your money.  That having been said I’d like to point out that the money mechanics are also important.

And guess what?  Just like most things about money, no one tells you how to do the basics around paying your personal bills.  By basics I mean having an easy, fundamental, simple system.  Mostly we tend to be at one end of the spectrum of the other with the mechanics of money.  At one end everything is all over the place.  There is no organization.  Bills are piled.  They may not even be opened.  It’s both maddening and overwhelming!  On the other end is someone who has a complex system with everything sorted, labeled, filed and date stamped.  That way can have people spending way more time and energy than needed.

These two extremes are pretty typical in all money thinking.  We are spenders or savers.  We are way too messy, or way too organized.  No surprise that, just like many other areas of money, I’m all for the mechanics landing more in the middle.  So based on running into some of these extremes lately with some folks I thought I’d share my personal system for paying bills.  You can, of course, use it or not.

The first, and in many ways most crucial thing, is the Basket.  Find a basket, something big enough to put bills in, and hopefully fun (like the one in the photo).  Put it somewhere that’s easy to see.  Now put the actual bills, receipts, checks, insurance papers and the like in the basket every day.  Open the mail by the basket.  Throw out anything that isn’t important like ads, or in my case the return envelope since I pay bills online.  What’s going to be in the basket is only things that you have to do something with.  Bills you need to pay.  Checks you need to deposit.  Receipts you want to record somewhere.  Things that require an action. Only put in the basket things that are related to your personal money. Also, as a bonus, the basket is an easy process for a couples that shares finances.  You both just put the bills, checks and receipts in the basket.  Ta da!  And if you also have a business just have a different basket for the business.

Now twice a month when you pay bills (or more often if need be) you just empty out the basket, create a couple of piles and do what is needed with each pile.  There’s not a bunch of junk to sort through, just the essentials.  When you are done the basket will be empty unless there is something that you aren’t ready to handle yet.

While you are handling the stuff in the basket I suggest one other tool: a form for the basics of each months bills.  I call the one I invented “Handy Dandy One Glance, Single Page Financial Obligation Overview Tool”.  I like the irony of giving this one page goody a complex name!  It’s a simple list of all my bills, with columns for each month.  I put a check mark in the current month column next to the vendor’s name each time I pay the bill.  Thus it’s really easy to see at a glance what’s been paid and what hasn’t.  On the same page there is a place for noting when Subscriptions/Dues/Renews are due; those things that aren’t monthly.  So one page for the whole year.  You can create something like this yourself, or email me at shell@sensiblecoaching.com and I’ll send you a PDF.  Easy.

Next, if you are a “cruncher” you can post the payment or receipt to your spreadsheet, or accounting program.  If you aren’t a cruncher you can skip this and go directly to filing.  Personally I have a file for “filing” and only do it every so often.  Remember, I’m a recovering accountant so I tend to crunch, keep paper, and have it all well organized!

What you want is simple money mechanics that keep you up to date, paying things on time, depositing money as it comes in, and not having to hunt and fret over the process.  This system has worked well for me for many years.

Give it a try…and use a fun receptacle.  It’s great to start your bill paying each month with a smile if not a giggle.

For a copy of the form, or more support on simplifying your Money Mechanics give me a call at 503-258-1630, email me shell@sensiblecoaching.com

Ka-ching

Shell Tain, The Untangler

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