10 ways to get your finances in order—your future self will thank you

The first thing to do when getting your finances in order is to create a workable, realistic budget, grounded in financial fact. Without one, everything else is guesswork. But with precise tracking of income and expenses, it's easier to know how much you can spend and how much you can save.

A good budget helps you prepare for large expenses that come up occasionally during the year, like auto insurance payments, birthdays, the start of the school year, and the holidays. A budget also is a great tool for identifying spending patterns and setting limits. For example, if you discover you spend too much every weekend on entertainment, you can look for other ways to have fun that don't cost as much.

When you set limits and track your spending, your money doesn’t seem to “evaporate.” Your budget can show you where your money went last month and help you to control where it goes next month.

We know why it’s important to track spending, but what’s a good way of doing it?

You might create or download a spreadsheet in Google Sheets, MS Excel, or some other software tool. You could also do it on paper, using a template from a website or drawing up your own plan.

From there, you can record all your expenses, picking up information from bank and credit card statements. For cash purchases, you could keep a simple list on your phone, or even in a notebook. Budgeting apps for your smartphone can also help you track spending in real time.

Set up a routine for compiling and recording your spending activities so it becomes a habit. 

Tracking expenditures builds awareness of your spending habits. Patterns become more apparent, like paying for subscriptions you don't use or all those fast food stops that add up to a large amount. Consistently tracking expenses helps you make smarter choices, spot areas to cut back, and stay on top of your financial goals.

Car repairs, medical bills, replacing major appliances—there’s no telling when unexpected expenses will pop up. But a financial cushion can help soften the blows, and one way to do that is by starting an emergency fund.

This can be accomplished by opening a savings account dedicated to your emergency fund and using automatic deposits to add to it every payday. A dedicated savings account can help you avoid spending emergency funds on non-essential items.

An emergency fund  can help you cover unexpected expenses without needing to rely on a credit card and piling up debt. The standard emergency fund goal is to save 3 to 6 months of your current expenses.

Some credit cards and loans can have very high interest rates, and if you start to accumulate credit card debt, that interest can be a real drain on your budget. To reduce financial stress, pay down debts as soon as possible.

Tactics like the avalanche and snowball methods can be helpful in attacking high-interest debt. You might also consider using a 0% balance transfer credit card.

The faster you get out from under paying interest, the faster you can allocate funds to your other financial goals. You might even decide to put less into your emergency fund while paying off high-interest debt.

Automated services can help you get your finances in order and keep them that way. When you set up auto pay for bills it could reduce the chance of having late fees. Some retailers give a discount to customers who use autopay.

Automation helps you save without thinking about it. You might be able to have your employer do a split direct deposit—a portion of your salary gets deposited into checking and another portion into savings. If that’s not possible, you could set up automatic, regular transfers with your bank from checking to savings.

Your credit score indicates your credit worthiness—how suitable lenders think you are for receiving a loan. It can influence whether you'll be approved for loans and, if so, what interest rates and credit limits you'll receive.

When you check your score regularly you can see if your good financial habits are helping your score increase. You also could spot decreases in your score that indicate that there is negative information in your credit report.

You're entitled to a free copy of your credit report each year from the major credit bureaus, and it can be obtained at the AnnualCreditReport.com website. Look over the reports, and if you spot something wrong, notify the credit bureaus. They're obligated to investigate and correct the issues if necessary.

A budget gets you deep into the details of your spending, but it can also help you look at the big picture and address goals, both long and short term.

This budget can help reveal how your daily actions can work towards saving for a down payment on a home or car. It can also help you figure out how to pay off debt and save for retirement. And it may help motivate you to make and stick to tough decisions. But if you don’t attach goals to your budget, you could lose focus and your finances can drift away from you.

If an expense doesn’t help you reach your goals or address real needs, look for ways to reduce or eliminate it. Here are some personal finance tips for trimming expenses. 

Take advantage of the available financial tools like a budgeting app or program. They can provide structure, automation, and visibility, three things that make saving much easier. Check with your bank to see if they offer any helpful online or standalone financial tools.

These tools can help leverage things like:

A budget isn't set in stone. Your circumstances and finances will change, and you’ll want to adjust your budget accordingly.

Review your budget on a regular basis. You might want to do a weekly review of expenses and a monthly review to see if your budget is balanced. Schedule a regular time, whatever system you decide on.

When you organize finances correctly and use a budget to keep things on track, it can give you peace of mind and improve your financial outlook.