by Judith Richards

Created on: June 21, 2009

Before you can fix your finances, you need to know where you stand financially. That means looking at your financial statements, checkbook(s), bank statements and bills. If you're not keeping good financial records you will not know where the problem is and how to fix it. There are several things you can do to get your records in order:

1. Get your bank accounts in order. Hire a PT bookkeeper, if necessary, to reconcile your accounts. It is well worth the money to have him/her enter your checks, deposits, debits, etc into simple accounting software and provide you with monthly, quarterly and yearly reports.

2. If you haven't been good about writing information in your check register, it will be more difficult for someone to put it all together, but it can be done. You might hire a bookkeeper to reconcile your accounts every month and keep you on track, but you still must faithfully enter all information in the checkbook register.

3. Do not rely on online banking to tell you everything about your finances. Only your checkbook register can give you the current - to date - balance. Online banking will not show any checks you've written that haven't cleared nor break out your expenses in categories.

4. If you decide to do #1 and #2 above yourself, do it with bank statements or purchase simple accounting software like Quicken. I highly recommend the use of some software that will allow you to easily reconcile your register and provide reports on at least a monthly basis. Not only will you be able to see where your money is going, but also if you're spending more than you bring in. The year end report will also provide you with information to file your tax return.

5. Review any statements from brokerage accounts, savings accounts and CDs. If you have any questions, get them answered. Know where your money is going and how it is doing.

6. From the reports, either ones you've prepared yourself or received from a bookkeeper, make a budget based on your income and expenses. If your reports show a loss at the end of every month, you know you're going to have to make some adjustments in your spending. Set up a budget you can live with and keep it where you can refer to it constantly. The next month print out a new report and compare your spending to see if you were on track or not.

7. If you are carrying a large amount of debt and can't keep your spending under control, a visit to a local Consumer Credit Counseling Service can be helpful. A financial planner can also help you with setting up retirement accounts, etc.

The most important thing is to understand your current situation by getting your records in good order. Once you know where you are, you can see what areas need work and by drawing up a budget begin fixing your finances. Hopefully, your new budget will cover not only payments on current debt, but also some money set aside for retirement.

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