When it comes to household chores, some people would rather clean toilets than manage their money. I can understand that. We used to have paper-based banking (Do you remember having a bank book?) Then, financial institutions moved towards digital banking. However, some accounts are still paper-based, so we end up with a disorganized mishmash of information in various locations. Here are some tips to help you streamline your day-to-day finances. Hopefully, these tips will help relieve some headaches, and you might also save some money in the process.
Determine What You Have & Where It Is
As almost all financial advisers suggest, the first step is to create a list of your accounts, such as bank accounts, credit cards, and investments. Include other accounts like your utilities (electricity, cell phone, etc.), shopping sites (Amazon, etc.), and anywhere else you might have a subscription (Netflix, Apple Music, etc.). Use previous bank and credit card statements to help you make a list.
When creating your list, write down whether you get paper or electronic statements and the statement issue date. For e-statements, note the email address that receives the statement or whether you must log in to a website to download it. You should also record where you store the documents. For example, paper is in the filing cabinet, and e-documents are in your computer’s “Finance” folder.
Make your list on paper or use a spreadsheet (Excel, etc.), whichever is most comfortable. If you and your partner share financial responsibilities, work together as much as possible.
Block Time
Designate a time block to review your day-to-day finances. Some clients with busy households block an hour every Sunday morning when the adults can have uninterrupted time. Other clients prefer to block off one weeknight every month. When you are starting to organize your finances, you might need a larger time block. However, as you streamline your financial management system, you can reduce the duration and frequency of your time blocks.
Track Automatic Transactions
Do you remember in the olden days when we used to take time off work to stand in line for hours at the bank to deposit a cheque or pay a bill? I rejoiced when they introduced direct deposits and automatic withdrawals. It saved so much time!
There is an insidious downside, though. We tend to lose track of which payments are coming and going. It’s easy to overlook the $1.53 monthly charge for the smartphone game we never play. Not to mention those sneaky price jumps for certain services (streaming media, perhaps?). Those companies know most people are too busy to notice any fee increases when dealing with their day-to-day finances. Over time though, unwanted automatic payments add up, and no one can (or should) memorize that much information. It’s time to get it out of your head and into a list.
To create your list, review your bank and credit card statements. Write down all deposits and withdrawals from each account. Include which account is debited/credited, the date they clear the account, the amount debited/credited and the currency if applicable. Take a few hours and review your statements over the previous 6-12 months. Alternatively, you can check a few of your statements during your designated time block and add the transactions to your list.
If you use a digital to-do list, set each automated transaction as a repeating event. When you review your day-to-day finances, confirm the transactions and the amount, then check them off your to-do list.
Manage Your Passwords
There are many benefits to a password manager. It will allow you to create secure passwords and sync passwords across devices. And more importantly, you will have the information for all your accounts securely stored in one place yet accessible any time you need it. There are free versions of password managers, but paid versions offer more features, and their monthly fees are less than the price of a cup of coffee.
For people who prefer a paper-based system, choose a notebook to record your login information or use a dedicated password logbook. Make sure the notebook doesn’t have MY PASSWORDS emblazoned on the cover and lock it in a filing cabinet when you are not using it.
Whether you use a digital system or a paper-based one, record the following information:
- Name of institution or website (e.g., Royal Bank, BC Hydro, etc.)
- Date you write this information
- URL (e.g., website.com)
- Login name or email address
- Password
- Email address you use with the account (sometimes it is different from the login name)
- If two-factor authentication (2FA) is enabled and method (e.g., text or email)
- Phone number on file if 2FA is via text
- Security questions and answers
- Notes: Include what the account is used for and if there are automatic deposits or withdrawals associated with this account.
I created a form with the above information on a standard letter-sized paper for your convenience. Download the Out of Chaos paper-based password management system (pdf).
Flag and Tag
Here is the real trick of managing your password information – flagging and tagging. With password management software, you can create tags for each account. For paper-based systems, flag items by using coloured stickers or symbols. Create a legend in the front of the book, so you (and your power of attorney/executor) will always know what each colour or symbol means. Start by creating these flags/tags:
- Bank Deposit: If you set up automatic deposits with certain organizations (e.g., employer, government benefits, etc.) and change your banking details, you will have to log in to these institutions to update the deposit information. If you have funds automatically deposited to multiple bank accounts, you might wish to create a different colour for each bank account.
- Bank Withdrawal: These accounts regularly withdraw money from your bank account (e.g., monthly electric bill). If you change your banking details, you will have to log in to these institutions to update withdrawal information. If you have funds automatically withdrawn from multiple bank accounts, you might wish to create a different colour for each bank account.
- Credit Card Charge: These accounts charge your credit card regularly (e.g., Netflix). If your credit card info changes (new cards have new CVV codes), you will have to log in to these institutions to update your card details. If you have multiple credit cards, you might wish to create a different colour for each one.
Note: I included the above information on the form in the Out of Chaos paper-based password management system.
Use a Personal Finance App
Using personal finance management software can help you manage your money better and faster. Some banks offer basic budgeting features within their apps, but their scope might be limited. Your financial advisor might be able to recommend software for you as well. Some popular apps are:
- Quicken: Available for PC and Mac, but the Mac version does not have as many features as the PC version. It also has an app and web-based version that works with all major browsers. Make sure you purchase it through the Quicken Canadian site to use it with Canadian banks.
- Banktivity: Available only for Mac. Purchase it through the Canadian Mac App store to use it with Canadian bank accounts.
- Mint: Free online money management software. Sign up on Mint’s Canadian site. Download the Canadian app from Apple or Google Play.
Of course, the traditional pencil and ledger book is also a great way to keep track of your day-to-day finances.
Setting up your automated transaction reminders and sorting out your passwords takes at least a few hours. But with streamlined day-to-day finances, you will spend less time managing your money – and hopefully, see your spending habits more clearly.
