Never Enough Time
Time management becomes an increasingly important tool for building wealth as you get older – there simply is just less and less time but more and more paper work and small financial decisions to make. In general most people will also say they don’t have time for everything they need to get to and if finances aren’t an interest/hobby – it likely it pushed to the side.
Even though finances are a hobby of mine – I have had to actively work to reduce my time I spent on them as it was eating up my weekend as things got more complicated over the years. I am not perfect but this post will walk through my way of tackling all of this financial stuff that comes up with minimal time.
First – Why Am I Talking About This?
When I get questions at work on personal finances I consistently hear at work people are overwhelmed by their finances, thinking there is too much to track, or that they are in a constant state of “gotcha” or trying to figure out the next gimmick.
I get it…. our financial lives are driven by:
- Costs that come in daily
- Paycheck income that comes in weekly, bi-weekly, monthly, and/or sporadically
- Multiple healthcare and dependent care account options
- Credit cards
- Bank statements
- Retirement and all the investments
- Tax forms
- Etc
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Overwhelmed
When I start asking the next level questions on why people feel overwhelmed it generally comes back to organization, time management, and lack of a game plan.
Organization
To effectively manage your time you need to be organized in your approach to your finances – there is no way around it. I agree there is a lot of financial stuff but if you have a game plan you can get to it all without much effort.
Step 1: Find some time to organize it right. If you’ll spend the 3 hours (maybe more if your stuff is scattered) and consolidate everything orderly it will pay off.
Step 2: Decide how you want to manage all that “paper stuff” that comes in. Some people like boxes or stuff from the container store…… I’m cheap and I have used Brown Kraft Clasp 9″ x 12″ Envelopes (you can get 100 for $20) for years. Why do I like these? They are cheap, I can write on the outside of them, they clasp so paper doesn’t fall out, I can flip through them pretty easily…. need to quickly find last year’s taxes? Bam!
Step 3: Organize your stuff! I am not orderly when I put stuff in the folder…just jam those papers into the right folder!
My folders are:
- The “to do” folder
- Current year stuff I’ll need for taxes
- Current year HSA (medical) reimbursement receipts – I keep these separate because I seem to get a lot of these with four people in the house… you might be fine to keep with your current year taxes
- Last years tax return and support
- Last year HSA reimbursement receipts
- Social security cards and birth certificates
- I have our passports in one of these
- All my property stuff for house
- All my property stuff for the rental
- All my car stuff… car titles etc
I am probably missing a few but you get the idea…. just jam the paperwork into a folder so you are not wasting time sifting through paperwork.
Step 4: Setup an excel sheet to organize your financial life so you know your budget, how your finances are doing etc. I’ll have a post on how mine is built later and how I use other services to keep it up to date. Even if you don’t get 100% in there in the first sitting…. get started!
Step 5: Set a cash level for your bank account…. this will help you help you act quickly when needed: I Hate Cash – Why and How I Minimize It. I cannot sell this step enough – this was one of my biggest time savers over the past several years.
Step 6: Know your game plan for extra cash that shows up – is it going to debt or savings?
Maintenance Mode
Ok now you are organized….. how do we keep this all simple and not spend hours on our finances each week?
Here is my simple process:
- All mail and receipts from the day when it comes into the house gets sorted through… if it is important I put it in my “to do” folder. Rest is trashed… most of it is trash or good coupons!
- Typically anything that results in cash flow for me I get done right then and there…. more money! Sometimes I may do these on a Saturday or Sunday morning if I didn’t do right away.
- Knock out my quick App run down…. takes less than 5 mins each time I run through:
- HSA reimbursements – I have the app of my phone… tap out the reimbursement done.. receipt goes in my folder.
- Check my bank account for funds over my target cash level – pay down credit card with max available. See my funds level discussion here: I Hate Cash – Why and How I Minimize It
- Beginning of the month only: Check my Fidelity account – sweep dividends out to checking account. See my discussion on my income portfolio here: Actionable Passive Income – An Ease Simple Scalable Diversified and Liquid Income Portfolio Starting at $25
- Beginning of the month only: Child care FSA account – I have the app of my phone… tap out the reimbursement done.. receipt goes in my folder.
- Once a month…. takes about 30 mins – usually do on a Saturday or Sunday morning
- Categorize all my credit card expenses and see how I am tracking. As mentioned in my cost cutting post I am just looking at a 6 month average vs stressed about the current month: Cost Cutting – Don’t Dismiss the Necessary Evil for Your Personal Finances
- Check in on my 401k – rebalance as necessary
- Any extra cash left over or a deficit is dealt with by executing my normal plans of investing or cutting back expenses so I can get my credit card caught up next month (credit cards always give you 30 days without interest so I don’t stress if it’s not at zero by the end of the month but that is my general goal).
- Once a year – tax time:
- Make an excuse and talk to my wife on deciding on our primary financial goal for the year. Where does extra money if it show up go? Which debt, investment, or home project are e trying to tackle?
- Knock out my taxes – I’ll walk through this one in more detail during tax time
Once You Have A Plan – Not Really That Much Time
No one can build out your short and long plan range but you unless you have an adviser do it for you. I’ll share my knowledge over time on this blog but in general once you have a rough plan of where you are headed the decision making process in a given week or month isn’t really that much of a time drain.
