Get your finances in order

Below, you will find a few suggestions of what to do when you want to get your finances in order.


Order a credit report

If you live in a country where credit reports exist, you should definitely check out your own personal credit report. There are probably many companies that will give you access to your credit report for a fee, but before you pay anything to see your credit report we suggest that you look around for a free or really low-priced alternative. There are many jurisdictions where a consumer has the right to access their own credit report a certain times per year for free or for a very small administrative fee. In the United States, the three major credit bureaus all offer free yearly reports on demand.


If you have a credit card, don’t forget to check out if you can get any help from the credit card issuer when it comes to accessing your credit report. Quite a lot of credit cards come with free access to the credit card holder’s credit report.


Gather and sort your financial paperwork

If you financial situation feels chaotic, a good move is to gather all your financial paperwork in front of you. Get your credit report, bills, bank statements, insurance policies, rental agreements, etc to provide you with a better overview of your financial situation.


Sort the documents and find a way of organizing them that suits your personal preferences. Also make sure that whatever system you create will make it easy for you to enter new bills, credit reports, etc into the system in the future.


Now that you have your financial paperwork in front of you, determine what your financial obligations are. How are you spending your money and are there areas where you could cut back?

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Create a budget

You will need to make a yearly budget and a monthly budget. Many people fail with their budgeting because they only do a monthly budget, and they forget that this monthly budget must include posts for things that aren’t “monthly”, such as quarterly payments, Christmas or other holiday expenses, back-to-school expenses, and so on. If you are living paycheck to paycheck, it can be difficult to get a strong sense of what your financial situation actually is. Also, irregular but predictable expenses – such as quarterly payments – can seem like unexpected expenses simply because you didn’t have them last month. Because of this, it is a good idea to make a yearly budget and then break it down into monthly segments.


There are many sites online that can help you create a budget, or you can do it the old fashioned way with paper and pencil. Start by writing down your income. Then list all the expenses that you have already committed to, such as rent payments and monthly bills for debts and utilities. Also include costs that are necessary for you to keep earning money, e.g. the subway card that is necessary for you to get to work on the other side of town. Next, add things that are necessary, but that you haven’t committed to yet, e.g. that insurance policy that you definitely should sign up for and the minimum cost of groceries and hygiene products each month to keep you fed and clean. Is there any money left? That money is for non-fixed expenses, and it should be budgeted as well, by being placed into categories such as savings, paying off debt, social obligations (birthday gifts, meals out to celebrate, etc), maybe adding some extra money to your grocery and hygiene spending, and so on.

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Keep in mind, that just because something in your budget is necessary it doesn’t mean that it has to stay as expensive as it is now. Maybe the best way for you to get your finances s in order is to get a less expensive apartment, a room mate, a less expensive phone plan, start planning your grocery shopping better, and so on.


Another important point is that your budget should include putting money aside in a separate emergency fund. You may not know what type of emergency that will occur, but you can be pretty sure that during the coming 12 months, you will be facing something. A broken tooth, car problems, or taking time off from work to tend to a sick family member are all events that you didn’t know about in advance – but we all know that things like these can happen so we should plan accordingly. Having an emergency fund means not having to wreck your budget and/or create new debt when the event takes place. We should all expect something unexpected to happen.

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Stick to the budget

If your financial situation has been messy in the past, you need to keep track of every expense on a day to day basis. Each time you buy something, write it down and see where it fits into you budget. After a while, you will see patterns in your spending and might spot areas where you could save money. This is a good way to build financial acumen. Eventually, it may become second nature to you and you may be able to relax a bit, but when you start out, you need to be strict and vigilant.


It can be helpful to break down the monthly budget into a weekly budget, even if you get paid once a month. Let’s for instance say that your budget is roomy enough to include $200 for lunches. If you start the month with four scrumptious $25 lunches, there will be just $100 left for the rest of the month. If you instead assign $50 per week for lunches, the risk of you being carried away and spending too much right after being paid will decrease.


Several computer programs are available to help consumers track expenses, e.g. Microsoft Money. There are also credit cards that will give you access to your account online and allow you to (almost instantly) see all the purchases you make using the card. Be careful about cash withdraws, because they can become a “black whole” in your budget. If necessary, keep a separate log for all purchases made using cash.

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Pay off expensive debt

There are different kinds of debt, and some kinds of debt are more expensive than others. In addition to costing money, some debts can also come with social costs. An interest free debt to family or friends can seem like a “low cost debt” at first glance, but is it really low cost if it causes problems in your relationships with others or keep you from living your life according to your own choices? A very important part of getting your finances in order is to sit down and take a look at all your debtsformal debts to credit institutions as well as informal loans given to you by family, friends, colleges, etc.


Generally speaking, it is often a good idea to follow a two part system when paying down debt each month:

  1. Calculate how much money you need to make all the minimum payments on all debts. Paying at least the minimum each month is important to prevent late fees, increased interest rates, a bad credit score, etc.
  2. Now that you know how much money you will need to make all the minimum payments, select one or a few of the debts and make a larger payment than just the bare minimum for these selected debts. Which debts to chose? Well, there are many methods available for paying down debt and they all come with their respective strengths and weaknesses. Ideally take a look at several different methods, and pick one that suits your specific situation.Generally speaking, high-cost debts should be given priority. So, if you have a $1,000 credit card debt with 35% interest rate and $5,000 student loan debt with a 10% interest rate, it is usually a good idea to make minimum payment on the student loan until you have paid off the credit card debt in full.



It can be tempting to refraining from being insured simply to save on monthly payments, but this choice can end up costing you a lot. Instead, devote some time to researching how you can get sufficient insurance coverage for a reasonable price. Identify what type of insurance you need and focus on obtaining that.


If you for instance are a single person without kids, life insurance is probably not your primary insurance need. Instead, renter’s insurance or home owners insurance might be the most important insurance coverage at this stage of you life. If you are a 25 year old struggling to pay down super-expensive credit card debt, putting money into retirement insurance might be a foolish decision from a financial point of view, and so on.


Some credit cards come with really good travel insurance. Spend some time checking out if it is the right thing for you.


Make a will

A part of having getting your finances in order is determining what will happen with your finances when you die. This might be an unpleasant subject to think about, but death can happen at any stage of a person’s life. If you have people depending on you financially – such as underage children – taking care of this point becomes especially important and you might also want to look into life insurance, mortgage insurance and similar solutions.


Keep important documents sorted and safe

Earlier, we mentioned the importance of having a system for sorting your bills and other financial information. You probably also have documents that aren’t exactly financial information, but that can cost you a lot of money and trouble if they disappear. A part of getting your finances in order is therefore to collect all important documents and make sure that they are stored in an orderly fashion and in a safe place. Examples of such documents are real estate deeds, birth certificates, rental contracts, employment contracts, insurance documents, and retirement savings information.


Also, make copies of your important documents, you identification (driver’s license, passport, etc) and any credit cards and store them in another safe spot. Copies can be highly useful if you ever lose the originals. You might also want to scan the copies and keep them on a personal flash drive that you store separately from the copies, ideally in another building in case of fire or other catastrophe.


Last but not least, you may want to photograph your home for insurance purposes and keep these photos safe. Getting help from the insurance company can be much easier if you have photos showing the insured item before it was damaged, stolen, etc.

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As mentioned above, getting your finances in order is not just about eliminating costs – it is also about decreasing costs without having to give up things completely. Take a look at your expenses, e.g. cell phone plans, insurance policies, utilities, and so on, and then start searching for cheaper alternatives. Sometimes, saving money is surprisingly easy.


  • Call your cell phone provider and ask them to take a look at your phone habits and see if they have a more suitable plan available for you that would save you money.
  • Send out emails to insurance companies and ask what they can offer if you gather all your insurance policies with the same insurance company.
  • Some insurance companies offer discounted car insurance policies for drivers that complete a safe-driving course.
  • Are you taking full advantage of your gym membership, or could you do fine with a less expensive alternative?
  • Some companies will give you a discount if you switch from paper bills to electronic bills.
  • What are you paying your bank and/or credit card issuer? Is this the best choice for you? If you are paying for certain services that you never actually use, it might be time for you to switch bank or at least renegotiate your dealings with the bank. Also keep in mind that there are plenty of $0 annual fee credit cards available.


These are just three of many examples of how you can save money without sacrificing much.


Increase your income

Budgeting is often depicted as the art of cutting costs, but don’t forget to look at the other end of you budget as well – your income!


Instead of solely focusing on how to reduce your spendings, you should also be looking at your ability to earn more money. Maybe you can pick up extra shifts to quickly pay down costly credit card debt? What would be required of you to be promoted to a position where you would earn a higher salary? Would it be possible to get an extra job?


If you own items that you don’t use anymore, sell them (online or offline). Sometimes a wardrobe cleaning and the uncluttering of the garage can bring in quite a lot of money, especially for someone who is struggling to get their finances in order.


Do a debt audit

We have mentioned debt a lot already in this article. As a part of your new well-ordered life, you shouldn’t just pay down debt – you should also make sure that you have the best possible debt solutions. At least once a year, it is a good idea to do a personal debt audit and check out the interest rate, fees, etc of all your debts. Maybe there are some debts that you could convert into less expensive debt?


Let’s for instance say that you have some rather pricey credit card debt that you are working to pay down. If your credit report looks nice enough, a bank might be willing to offer you a more beneficial loan that you can use to immediately pay off that expensive credit card debt. Paying lower interest rates and fees means more money available to pay off the actual principal.


It is also often possible to save money by consolidating debt. Instead of paying bills to five different lenders, you take out one large loan and use it to pay off the five debts. If each of those five lenders charged you a $5 monthly administrative fee, that was $300 a year in administrative fees.


Do an investment audit

If you have investments, make an effort to learn more about them and adjust your investment portfolio if necessary. It is important to take tax issues into account here, as well as any employer contributions.