A coworker is currently getting her financial house in order for the first time. She is paying off a heap of debt, setting up insurance policies and wills, and generally doing all the things she knew that she should have been doing all along. I’m proud of her. But she came to me the other day, flopped in the chair across from mine and said, “I don’t know how you do it.”
“Do what?” I asked.
“Keep your finances in such great shape all the time. I’m exhausted. Keeping track of spending, watching my accounts online, setting up systems, reading, clipping coupons, cleaning up credit reports, shopping sales, inputting everything into Quicken. It’s taking up so much of my time, I feel like I can’t do anything else.”
I understand her frustration. I remember when I started out on my financial journey. I was just like her. I was constantly monitoring everything, tracking every penny, trying every system and reading every book. It was time consuming and I wondered if it was all worth it or if I should just chuck the whole notion and get on with my life. But I also remembered that it did get easier. There came a point where I just didn’t have to spend much time on my finances because they started to take care of themselves. I learned what worked for me and what didn’t; what was worth it and what wasn’t. I became educated about finance and that made everything easier. Today I actually spend very little time on my finances and everything tracks along just as it should. I only have to intervene when I have a life change or something else significant happens.
“It gets easier,” I said with a smile. “What you’re dealing with today is the start up phase. Once you get to the maintenance phase, you’ll find that you spend very little time on your finances.”
“How do I know when that happens?” she asked.
I told her that it would depend on her own situation and what she had to deal with, but in general she could look forward to the following things:
You’ll find the systems that work for you and discard everything else: As you start trying to get your finances in order, you’ll probably try many different spending tracking systems, software programs, budgeting tools, record keeping systems, bill paying systems, banks and types of accounts, and even systems for things like coupons and price books. After a lot of trial and error, you’ll get it down to the few systems and tools that really work for you. You’ll probably tweak them some more to optimize them and then you don’t have to worry about it. Your systems will be working for you and all you’ll have to do is use them.
You’ll become educated: In the beginning there is a lot to learn. New terms and concepts crop up daily. Eventually, you’ll have learned what you need to know to make your finances work. You’ll still have to keep up with changes in the financial world and new financial products, but that is learned in much smaller chunks than what you face when you’re just getting started.
Your past mistakes will be cleaned up and (hopefully) you aren’t making new ones: Part of what consumes a lot of time in the beginning of a financial journey is cleaning up past messes. You may find your credit report has errors that you need to fix. You have debts you didn’t even know existed and you have to get those off the books. You got into trouble with the IRS and you have to pay them off. You don’t have a will and have to draw one up. You don’t have any retirement savings and you have to open an account. Whatever you’ve screwed up in the past takes a lot of work to clean up. But as you go along and get things tidied up, they become things you no longer have to worry about. Just don’t make any more big messes and your past will soon be in the past.
You’ll have fewer transactions and bills to worry about: The more debts you pay off, the fewer checks you have to write every month. When you eliminate spending on things you don’t need, you have fewer transactions to keep track of. When you eliminate and/or consolidate services such as cell phone, cable or Internet, you have fewer bills coming in. All of this means your workload is greatly reduced. You have fewer transactions to keep track of and you spend a lot less time paying bills.
You’ll get better at things: Eventually you get better and faster at things like balancing your checkbook, navigating online bill pay, shopping sales circulars, clipping coupons, and working with software like Excel or Quicken. These things become second nature to you and you can speed through your tasks with little effort.
You’ll develop good habits: Once you get into the good habits of regularly paying your bills, properly storing your records, knowing your income and expenses, balancing statements, looking for errors, and generally being financially responsible, you find things get much easier. Good habits lead to an easier financial life and pave the way for success.
Keeping your finances straight isn’t always as difficult as it is in the beginning. Once you get things under control and cleaned up, all you have to do is maintain the system. Sure, you’ll have to rework it once in a while when you get a raise, start a family, or near retirement. Big life changes mean that you’ll have to reevaluate the systems you’re using. But the day to day maintenance becomes a matter of catching errors, balancing your books, identifying overspending before it becomes a problem, paying your bills regularly, storing your records, and shopping around occasionally for quotes on the services you need. I find that I spend less than an hour a week working on my finances these days and that is more than enough time to keep things humming along smoothly.