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How to Organize Your Finances - Part 2

FinanceMaggie | Harper + Oakley5 Comments
How to Organize Your Finances - Part 2 | Harper + Oakley

As promised, I'm back with Part 2 of How to Organize Your Finances.  In case you missed Part 1, be sure to read that first here.  I went over how to do a monthly finance review and how to create a budget.  I included free printables for July to help you get started. 

In this post, I'll cover how I track my expenses on a day-to-day basis and how I save for big purchases.  I'm continuing to follow the Dave Ramsey method, but I've combined a couple of his offerings to figure out a system that works best for us.  I hope this can help you and your family as well!

1. Set Up A Monthly Budget on Every Dollar

Using your budget printable as a guide, input your income and expenses on the Every Dollar websiteThis is a free tool that allows you to set up your budget and track your expenses.  Make sure that you get a green check mark at the end that says "It's an Every Dollar Budget!"  This means that you've "spent" every dollar from your income before the month begins.  The Every Dollar tool is very intuitive.  You can add, delete, or change any category to match your budget printable. 

2. Determine Long-Term Expenses

Once everything has been inputted, you will go back through and determine which expenses are long-term expenses.  These are expenses that you save up for over time, contributing a certain amount each month. 

For example, if you know you will be spending $120.00 in December for Christmas presents, you can save $10.00 per month for the entire year.  This way, it's not a shock to your budget once Christmas comes around and you haven't saved any extra money for presents.  The point is to be intentional and purposeful with your money. 

Some other examples of long-term expenses are vacation, home repairs, and oil changes.  You can calculate the monthly budget for any of these by dividing the total expense by the number of months before that expense is due. 

Within the Every Dollar website, I like to "star" or "favorite" my long-term expenses so that they stand out from the other monthly expenses.  There is also an option to "Make This a Fund" which allows you to set a goal and track your progress. 



3. Use the Envelope System for Long-Term ExpenseS

To ensure that we always have enough money for long-term expenses, we use a version of the envelope system, which is simply using envelopes to organize your money.  You can read more about it on Dave Ramsey's blog or on Happily Ever Strader (which is where I first learned about it).

Once you have determined your long-term expenses, you will head to the bank and withdraw the necessary amount of money.  Because you will be dividing each expense into a separate envelope, you need to make sure that you have the proper breakdown of bills.  When I go to the bank, I typically go inside, use my debit card to withdrawal the amount, and ask the teller if I can have specific bills. 

For example, if you determined that your long-term expenses for the month of July were going to be Gifts, Home Repairs, and Vacation, you would list those out along with the budgeted amount.  You would then write in the type and number of bills needed.  You would total everything at the bottom, and that Total line is what you would take to the bank.  I normally just write this down on a scrap piece of paper or put it in my phone notes so that I can reference it.

Envelope System Example | Harper + Oakley

Next, you'll divide your money into the appropriately labeled envelopes.  I store my envelopes in a small expanding file folder that I found in the Dollar Section at Target (similar to this one).  Then, you leave that money alone until you need it.  Continuing with our example, when Christmas roles around, you will now have the money saved up in your envelope and you will have cash on hand to purchase your gifts.  This is a great feeling knowing that you are fully prepared and there won't be any (or at least as many) money surprises throughout the year.

{Note that we only use the envelope system for long-term expenses, but a lot of people use it for all expenses.  We actually tried that in the beginning, so it's good practice, but we found it more convenient to be able to use our debit cards when needed and not have to worry about always having cash on hand}. 

4. Track Daily Expenses on the Every Dollar App

This is my favorite part!  The Every Dollar App is a convenient way to track your expenses on the go.  It is currently available for the iPhone only, but it should be ready for Android phones soon.  You simply log-in using the account that you created on the Every Dollar website and begin tracking your expenses.  Hit the + button in the upper right hand corner to add an expense.  I used Cable/Internet for the example.  Input your expense amount, choose a category, and label the merchant.  Then hit Add, and it will be deducted from the Cable/Internet category.  By manually inputting each expense as you spend it, you are "feeling" each dollar that you spend, and it allows you to be much more proactive in managing your expenses.  

At the top, you can always see how much you planned to spend (your budget), how much you've spent, and how much you have remaining in each category.  This is a great way to keep your budget on track.  The Every Dollar App syncs perfectly with the Every Dollar website and vice-versa, so it's easy to see your most updated information from any device. 

This whole system has really helped me and my fiance organize our finances.  It took us several months to get the hang of things, so be patient, make small changes, and give yourself some grace.  If you have any questions, please feel free to comment or e-mail me directly - I would be happy to talk more! 

Have you created your budget for July?  Will you be trying out Every Dollar?  Be sure to stop back and tell me what you think!