Five Reasons for Financial Disorganization

It’s time to talk about everyone’s favorite, most exciting topics – money and taxes! No? Not your favorite? Mine either, but why does this topic generate such STRONG negative feelings for so many of us? We’re going to dive into that as well as provide some guidelines and best practices for how to get and stay financially organized.

Reason One: Fear & Overwhelm

Fear of facing our financial situation is likely the most common reason we struggle with staying on top of our finances. By not creating a budget or neglecting to regularly manage a budget, we can avoid the stress and anxiety that comes with seeing our income and expenses laid bare in front of us. Of course this is a self-perpetuating issue because the longer you avoid addressing your finances, the more difficult they become to manage, and the more you want to avoid them. Ultimately though this issue won’t go away no matter how long we ignore it.

So how can we overcome this fear? I wish I could wave a wand for you or give you some sort of easy “hack.” But this is one of those situations where the only way out is through. In other words, you need to accept that this is something you need to do, know that it’s going to be a little uncomfortable for awhile, and start chipping away at it. Progress not perfection. But as you work your way through your financial organizing backlog, a weight will begin to lift and it will get increasingly easy to manage on an ongoing basis.

Reason Two: It Feels Restrictive

Creating a budget or financial plan can feel too restrictive for some people. It requires you to set limits on spending and can be especially difficult if your income fluctuates on a monthly basis. It can be helpful to think of managing your finances in a different way than many of us think of when we think of budgeting. It can be helpful to focus on setting goals and investing well and spending in a way that works for you rather than as a rigid limit on spending in certain ways. I’ve read excerpts from the book Budgets Don’t Work (But This Does) by Melissa Browne that do a much better job explaining this than I can, but the way I like to think about it is that managing your finances doesn’t require an all or nothing approach in the way traditional budgeting would make you think. Let’s say your refrigerator dies and you don’t have enough money in your budget to buy a new one outright. You may decide to finance a new refrigerator or pull money from a different spending category to cover it. Traditional budgeting would make you think you blew it this month. The budget is ruined. This kind of thinking can lead us to abandon financial management entirely when things go off the rails which is ultimately self-defeating. Instead think “is this the best use of my money right now?” If it is, then go for it. And make the necessary adjustments to cover these spending changes.

Reason Three: Time

We’re all busy. None of us have as much time as we’d like to do the things we love let alone something that’s not so much fun like managing our finances. So it’s entirely understandable that a major reason many of us don’t keep on top of our finances is because we can’t or don’t want to spend the time to do it. This is another topic where, to get over this, it’s going to get a little uncomfortable before it gets better. Because the way to address this is to invest the time upfront to get a system/plan in place. Once you’ve done that, my biggest advice is to manage on an ongoing basis.

Let me tell you a little story about my first year in business as an organizer. This was the first time I could track and deduct for taxes the miles I drove for business-related tasks. I downloaded Quickbooks to my phone and it offers a GPS-based mileage tracking system. Awesome, right? Except it’s just an app. So it tracked my mileage but I had to take the step of saying which trip was business-related and which was personal. All year long I ignored this step so that when it came time to turn in my paperwork for taxes, I had to compare my Quickbook mileage with my business calendar to categorize every single mile I’d driven that year. It took days. It was excruciating. The following year I began categorizing my mileage every day or at least once per week. Let me tell you that taking 5 minutes every day is way more manageable than taking an entire day once per year when I should be serving clients and earning money.

Don’t be like me. Once you set up your financial system, spend a few minutes every few days or an hour every week or so to check your spending categories and make adjustments rather than reviewing and updating your budget over several days once or twice per year.

Reason Four: Lack of Skill

Many of us simply never built those financial “muscles” and don’t know how to organize and manage our finances. Getting started is not only overwhelming but for many of us it is something we simply can’t do on our own. That’s okay.

The first thing to keep in mind is that even an imperfect system is better than no system. Once you start to pull together all of your financial paperwork and information, you can begin to experiment with what system will work best for you. Others Spoiler alert: there is no ONE right way to do this. The right way for you will be the system that is manageable for you even if someone else would use an entirely different system.

So now that you’re ready to build that skill, how do you go about it? For me, the easiest way to get started was just a straightforward Excel spreadsheet. But I was already comfortable in Excel due to my previous life in the corporate world.

If you aren’t already comfortable in spreadsheets, I recommend saving time and effort by taking advantage of one of the many solutions someone else has already figured out. That could be a budgeting app or picking up a book that tackles this topic. I really like the You Need a Budget app. The interface is really simple and it offers flexible approaches without feeling completely open and unstructured. They have a good set of recommended expense/spending categories but you can also create your own. It easily connects with bank and credit accounts if you want, or you can use it on its own.

Another great option is to hire someone to help set you up with a system. If you need a full budget plan set up, you’re probably best off hiring an accountant or financial coach to help you out. If you don’t need help with budgeting, just staying organized, contact a professional organizer near you. We can help set up bill-paying calendars and filing systems for you to stay on track.

Reason Five: Conflicting Values/Perspectives

One of the most difficult obstacles to overcome when trying to get a handle on your personal finances is when you and others in your household have entirely different perspectives on finances and how to manage them. Usually this stems from how we were brought up and what our financial situations were in our childhoods. If you grew up in a house that lived paycheck to paycheck and your partner grew up in a house with plenty of disposable income and no debt, it’s understandable that you would have both different ways of thinking about money and different emotions tied to money. You probably also have different skillsets when it comes to active financial management.

Like any topic when it comes to relationships, the most important thing when tackling this is that you and your partner can talk openly and listen supportively with a goal of understanding and supporting each other. I encourage you to be willing to try a system and talk about what’s working and what’s not and adjust accordingly. It can also be helpful to bring in a neutral third party to help you talk through your options. Research accountants or personal financial advisors who have experience working with couples to create manageable financial systems and budgets. Sometimes having the buffer of a third party in these emotionally charged conversations can force us to listen more actively and be more open than we would normally be.

Just Get Started

I said it before but I’ll say it again – the only way out is through. Ignoring your finances and letting your financial paperwork pile up is only going to make your situation worse. Focus on progress, not perfection. Don’t be afraid to reach out to someone for help. Ask friends if they have a budget app or book they love. Call a financial professional to help you with the budgeting and a long-term financial plan. Call a professional organizer to help you with filing, scheduling, and paper management. You don’t have to take this on alone and you don’t have to do it all at once. All you have to do is start.