Usually we’re somewhere in the middle of the road to sorting out our finances (i.e. you might manage to pay your bills on time, but can’t find them once they’re paid). To make sure I’m covering everyone, let’s assume that you’re all over the place with your finances, and we need to start from the beginning. That way, we’ve got everything covered. Following are some steps you can take that will make a MASSIVE difference to your financial health.

1. Sort

Go to your desk, briefcase, wallet, handbag, car, etc and gather ALL of your financial paperwork together. You are now going to sort it into piles. Here are some of the piles you’ll probably end up with:

Make sure you put a sticky label on the top of each pile with a name for that pile, so you’re not messing up piles or doubling up. There are some in the shop. Click here.

2. File

Put each of the above categories into a file. Following is my suggested way of filing – there are many types of files and many ways of doing this and once you get a system in place you can have fun with trying out different approaches. But if you want to get sorted out quickly and want a way that is very effective and easy to follow, try this:

3. Label

To make everything neat and tidy and easy to read, get a labeler (you can get one from Officeworks), and label all of your files.

4. Define your goals

Now you have done some sorting out, take a step back for a while and look at the big picture. What would you like to achieve? All the financial experts are unanimous on this: you need to have a clear set of goals if you want to be financially successful. In your Did You Remember The Milk? on page 201, we show you how to set out your goals so that they are really clear. In fact the more clearly defined your goal, the more chance of you achieving it. So whether it’s a new pair of shoes or an early retirement, write it down and put a date on it!

5. Create a budget

Now you have all your data at your fingertips, it’s time to create a budget.

This is the cornerstone of your wealth strategy. It’s really simple - once you know how much you’re earning and spending each pay period, you can work out how much you need to save to achieve your goals. I can hear you moaning – “but I’ve tried this before and budgets never work”.

Let me tell you this – don’t worry if you’ve tried it a thousand times before. The act of writing down your budget will make your life easier – You might find surplus money that you forgot you had (I did – with rebates I had forgotten to claim), you will feel more at ease if you know the total picture, you can feel less guilty about shopping if you know you can afford it, and this time – be realistic.

The only reason you probably failed last time was because you didn’t have a big enough desire for the goal, or your budget wasn’t realistic enough. Don’t pretend you lead a monastic life. Include the beers, the cigarettes, if that’s what you need to do to stay sane. Just put it in the budget!! You can now get the budget in excel version and just plug in your numbers!

Click here to buy

6. Cash flow

Set up a simple cash flow calendar that will show you which weeks are going to be tighter than others. This will help you to prepare for the weeks when the cash flow is going in more of an outward direction than inward!! Turn to page 217 in Did You Remember The Milk? for how to do this.

7. Paying bills on time

No financial system is complete without a system for paying bills on time. It will really help if you develop a simple process to make bill paying easy and painless.

• As each bill comes in, open it, and put it into your ‘bills to pay’ folder.
• Write a note in your diary on the date each one is due – this way you have a forward reminder
• Develop and order of bills to pay, for example: credit card first, then phones, then other utilities, then dry cleaning etc This way you are making sure you pay the ones that you are going to incur interest on first
• As you pay each bill, write down the date, the receipt number and the amount paid in case of any dispute. This is especially important for internet bill paying
• Once you have paid them, file your bills in your Paid Bills folder in the relevant category. Now your tax time just became a whole lot easier!