Beating Broke

Personal Finance from the Broke Perspective

Make Improving Your Finances Your Part-Time Job

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Imagine you give all the money you make in a month to an accountant and ask him to manage the money for you.  However, at the end of the month, he can’t tell you where the money went, just that it’s gone.  You’d likely be highly upset and fire the accountant.  Yet, that’s how millions of people handle their money.  You can’t fire yourself, but you can educate yourself and make improving your finances your part-time job.

Make Improving Your Finances Your Part-Time Job

Are You Like Most Americans?

When is the last time you took a vested interest in your own finances?  Do you make a budget every month?  Do you track how much you spend each month and on what?  If you don’t, you’re not alone.  In fact, approximately 60% of Americans don’t have a monthly budget (Business Insider).

How much time have you spent reading personal finance books and articles in the last year?  Learning about investing?  If you’re like the average American, the answer is not much.

Instead, many of us spend time doing activities that really don’t help us much in the future—scrolling through Facebook and Instagram, watching our favorite tv show, having a Netflix binge, talking on the phone or texting.

Make Improving Your Finances Your Part-Time Job

What if you used just a fraction of that time to improve your finances?  How different would your financial situation be a year from now?  Five years from now?  Ten years?

If you’re finances aren’t in the shape you’d like, why not challenge yourself to make improving your finances your part-time job?

What Is the Weekly Time Commitment?

Don’t worry, improving your finances isn’t going to take a lot of time.  I’m just asking you to set aside two to four hours a week to improve your finances.  You won’t be sorry.

Make Improving Your Finances Your Part-Time Job
Photo by Kelly Sikkema on Unsplash

What can you do in that amount of time?  Plenty.

  • Set up a budget
  • Track your spending
  • Pay your bills
  • Call your credit card company to get your interest rates reduced
  • Investigate refinancing your student loans, and if doing so will save you interest, actually refinance them
  • Read a personal finance book
  • Call your internet and cable provider to get your monthly bill reduced
  • Investigate house and vehicle insurance costs and change companies if you’ll save money and get the same coverage
  • Get an assessment on your home to potentially lower your property tax bill
  • Learn about investing
  • Take free online personal finance classes
  • Invest some of your money
  • Sell some of your unused items on Craigslist or Facebook
  • Listen to personal finance podcasts

This is only a small list of things you can do when you start your part-time job of managing your money, yet you can reap serious financial rewards.

Tools to Use

If you’re new to taking an educated, methodical approach to improving your finances, there are many places to go to learn more.  There are also many tools available.

You Need a Budget (YNAB)

For the last four years, I’ve been budgeting using You Need a Budget (YNAB).  I’ll admit, there’s a bit of a learning curve to using this software, but there are many free online trainings you can watch that cover every aspect of how to use the software.  There’s also an active Facebook group, YNAB (You Need a Budget) Fans, where you can find quick answers to many of the questions you might have about the software.

If you’re interested in trying YNAB, you can sign up for a 34-day trial for free.

Morningstar Free Investing Classes

Don’t know the first thing about investing?  Don’t worry.  That’s how everyone starts.  When you make improving your finances your part-time job, investing is an important concept to master.  Morningstar offers a number of free classes that cover a wide-range of topics:

  • Stocks,
  • Funds,
  • Portfolios,
  • Bonds,
  • ETFs,
  • Retirement, and
  • Planning

To access these free courses, simply sign up for a free Morningstar account.

The Library

Make Improving Your Finances Your Part-Time Job
Photo by Devon Divine on Unsplash

Another excellent, free place to learn more about money management and investments is the library.  You can find so many books there that will teach you about improving your finances!  Some of my favorite money management books include:

I Will Teach You to Be Rich by Ramit Sethi,

The Money Book for the Young, Fabulous and Broke by Suze Orman,

How to Make Your Money Last by Jane Bryant Quinn, and

Is Your Child a Money Master or Money Monster by Sunny Lee (excellent book for teaching your children in a natural way about money management)

YouTube

You can find many money management and investment videos on YouTube.  Just be sure to first check the credentials of the person offering advice.  Anyone can put up a YouTube video.

I sometimes enjoy watching Dave Ramsey videos (though not when he goes on tangents).

If you’re new to budgeting, there are people on YouTube who share their budgets every month.  One person that many people find inspiring is The Budget Mom.  She shares her budget each month and also does a recap at the end of the month.

Make It Fun

If the idea of spending a few hours a week on personal finance makes your eyes glaze over with boredom, try to make the time fun.  Set aside a certain time, maybe Saturday morning, or a few minutes every day.  Get comfy and make your favorite drink and settle in to work.

Investing Time Now Means You’ll Save Time Later

Remember, as you increase your financial education, you won’t need to spend as much time on your finances.  Maybe initially you’ll spend four hours a week or 16 hours a month, but a year or two down the line, when your finances are better and you know more, you may only need to spend two hours a week or eight hours a month.

As your financial situation improves, you’ll likely have more incentive to keep spending a little time each week working on your finances.

Try it.  What do you have to lose except a better financial future?

How much time do you spend every week working on your finances and growing your financial knowledge?

You’re Doing it Wrong! Rethinking Your Processes

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Habit.  It’s a dirty little 5 letter word.  I read somewhere that it only takes 6 times of doing something before it becomes a habit.  Habit is a close relative to addiction, although somewhat easier to change.

If you’re like me, you’re a creature of habit.  You like doing things the way you’ve been doing them and don’t feel very compelled to change them.  That’s the way I was before I began taking control of my finances.  I was a habitual spender of my paycheck.  There was no saving involved.  When I started this personal finance journey, I had to break that habit and begin a new one.  One that involved paying off my debt and saving money.  Like any other habit, it took time to really make it into a habit.

Within that greater habit, there are other habits.  The habit of checking balances regularly.  The habit of balancing the bank accounts.  The habit of keeping the budget.

That last one, the habit of keeping the budget, is the one I’d like to focus on here.  In the beginning (anyone else hear that choir?), I used only a copy of Microsoft Money (now defunct).  As I matured in my budgeting, I adapted a spreadsheet based on the budget spreadsheet that Dave Ramsey created for his Financial Peace University.  And that’s where it’s been since.  I have spreadsheets going back several years, in fact.

LedgerRecently, my computer became ill.  I ended up having to back all of my data off the hard drive and rebuild it.  Not a lot of fun, but it’s sometimes nice to start with a fresh drive and get rid of some of the flotsam that it’s accumulated.  Long story short, it took over a month to get it all sorted out and rebuilt.  When I had gotten everything installed and ready, it had been nearly 6 weeks since I had last checked in on my budget.  The process, if you’ll indulge me, is somewhat cumbersome.  First, I would manually enter in transactions from the internet banking application at my credit union.  With the version of Money that I had, I was never able to get it to properly import a file, so manual entry was my only option.  I would then manually enter in any outstanding checks and bill payment items.  Once the info was entered into Money, I would then manually, line by line, transfer the amounts from Money into the appropriate budget categories in my spreadsheet, using a calculator as I went to calculate the totals for each category.  (This was necessary because I didn’t have the individual line items in the spreadsheet, so I merely took the existing total and added whatever the line item was in Money to it.)

So, you can see, 6 weeks of undone budget work was quite a pile of work.  And like any good person with lazy tendencies, I put it off.  Before I knew it, there was almost 3 months worth of budget to do.  That was about the time that I decided that maybe my habit needed a bit of rethinking.  I began looking into new personal finance software that might integrate a little bit better.

What I decided on was You Need A Budget.  I’ll have a review of that coming up in the next week or so.

Telling all of you that was just getting us to this point.  The meat of the idea.  You’re doing it wrong!  Somewhere, something your doing is being done wrong.  Maybe not wrong in the sense that it’s incorrect (none of us make financial mistakes right?), but wrong in the sense that the processes that you are using are costing you;  Time or money, or both.

If there’s one thing I’ve learned through all of this, it is that you must be vigilant.  You’ve got to rethink your processes periodically.  It doesn’t have to be all that often; Some will go overboard and spend so much time rethinking their processes, that they’ll suffer from analysis paralysis.  Instead, set up a schedule where by you set aside an hour or two to go through your processes and try and discover new ways of performing those processes that might save you money or time.

In our case, moving to a newer software that made it easy to import our transactions and had the budget part of it all built in has resulted in saving us a lot of time.  What about you?  What processes do you perform that you’ve never changed?  Take a look at them and see if you can’t find a way to save yourself some time or money!

Image Credit: Ledger by er1danus

Looking for New Personal Finance Software

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Several things have happened recently that have made me decide that it’s time to upgrade the way I track my finances.  First, the software I currently use (Microsoft Money 2006) is no longer supported.  At some point it’s not going to work anymore.  Not for a while, but that combined with other factors says it needs to be replaced.  Second, currently we track our check register in Money and then transfer the info into a spreadsheet for our budget.  It’s somewhat archaic. Finally, it’s cumbersome and time consuming.  I’d like something that is all-in-one and that I can enter my register stuff in while categorizing it on the fly and that I can then click over and see the effect on budget and so on.

The software that I’m currently looking at and will likely demo is YNAB (You Need a Budget), MoneyDance, and Quicken.  I’ve looked briefly at GNUCash and I’ve used Quickbooks before, but both are pretty heavy duty accounting software and the object here is to simplify, not have to learn proper double entry accounting procedures.  So far, the front-runner is YNAB.  But, I haven’t tested any of them yet so I only have the online sites to go off of.  Which brings me to the online options.  I think they are out.  Some are very robust, but none of them will automatically bring in my information, and I have no need for access to it from anywhere, so it just seems like an added privacy risk that I don’t need to take.

Now, here’s where all you readers come in.  I want to know what you use.  What do you recommend?  And what options/features have you found to be “can’t live without” in your software.