Every day, the first thing that I do when I get home from work is unpack my gym bag and put the dirty clothes in the clothes basket, hang up the clothes that aren’t dirty and get into something more comfortable, and get everything that I need ready for the next day. Why? Because it makes my life easier.
This process makes my life easier in a couple of ways. The first is that I hate when things are out of place and the house is messy – it really bothers me and it distracts my mind from focusing on more important things. The second is that completing this means that I don’t have to worry about what clothes I’m going to wear when I wake up the next morning or what other things I will need for the day.
Having everything ready also eliminates a barrier to going to the gym the next morning that I otherwise might have because I know that everything I need is already laid out and ready to go. All I have to do is get up, get dressed, grab my things, and drive to the gym. The barrier of making all of those decisions has already been removed and gets rid of any of those excuses that I may otherwise have to not go.
It may sound weird, but I consider this a system. It’s a system to me because it’s the method that allows me to continue making progress, even after short-term goals have been met. In the exact same way, personal finance systems can help you make progress in your own financial life.
Systems Make Life Easier And Help You Reach Goals
I’m a very structured person (probably too structured at times, if you ask my wife) and I have a lot of systems in place because they make my life easier. Having systems in place for your personal finances is important not only because they will make your life easier, but also because it will help you to be more successful in reaching your financial goals. A proper system can make things easier and an often put things out of sight and out of mind so that you can make progress with little to no effort.
Systems are the means by which you reach your goals. It’s easy to set a goal and say that you want to lose 10 pounds by April or that you want to save $1,000 or anything else, but it’s more important to lay out how you’re going to accomplish that goal. The “how” is your system.
Many people set the same goals, but most don’t accomplish them. In the words of James Clear in Atomic Habits, “Winners and losers have the same goals…And if successful and unsuccessful people share the same goals, then the goal cannot be what differentiates the winners from the losers.”
Some Of My Systems
I don’t think that I’m someone for anyone to look up to or to strive to imitate, but I am very systemized so I wanted to share a few examples from my personal life here.
Another system that I have in place is going to the gym in the morning instead of the afternoon. That probably doesn’t really seem like a system at first, but to me it’s one of my best systems. I currently wake up at 4:05 AM Monday, Wednesday, and Friday (I let myself sleep in when I go to the gym on the weekend and on the other days of the week) so that I can get to the gym when it opens at 5 and get my workout in before work.
Honestly, I started going to the gym before work because I was intimidated by all the people who were there in the afternoon and I didn’t want to have to spend a bunch of time standing around and waiting to use equipment or machines. I continue to go in the morning because it’s the best way to start my day and I actually feel more energetic and motivated and productive at work.
Another important reason is that it allows me to keep my afternoons free when most other people want to meet up and so that I can meet with a client or go to a networking event and not feel guilty that I skipped out on the gym.
Also, I feel like using the excuse of being too tired after work to go to the gym is probably a pretty easy one to use, but it’s not something that I have to worry about since I’ve eliminated it.
Maybe you still don’t see this as a “system”, but I do given all of those reasons and benefits that I get from it.
Another system that I have in place is to prepare food in bulk on Sundays so that I know that I have lunch to take to work every day and some meals for dinner that are already cooked. This allows me to save money since groceries are way cheaper than eating out and it also makes it easier for me to get proper nutrition and hit my macronutrient goals.
Another part of this system is that I always pack my lunch the night before so that there’s one more decision and task that I don’t have to worry about in the morning before I head to the gym or work. I just grab my lunchbox and head out the door knowing I’m good to go. It may not seem like much on the surface, but it’s a way for me to eliminate an excuse for not going to the gym, to save money by not buying lunch, and to have a nutritious meal instead of something from a restaurant that might not be as healthy.
Here are some examples of personal finance systems that I use to make my life easier and hopefully some that you can put in place as well to make personal finances easier for you.
Systematize Your Budgeting
Whether you refer to it as a budget, a spending plan, or something else, being intentional with your money is the key to financial success. Having a system in place for a budget or spending plan will be the heart of your financial systems since you can’t save money and can’t pay down debt if you aren’t controlling where your money is actually going.
There are many free and cheap tools that you can use to track your money including EveryDollar, Mint, Tiller Money, and a spreadsheet, among others.
The exact tool that you use isn’t as important as finding the one that works best for you. A system for tracking your money might be to use one of these tools and to create a recurring task on your calendar to reconcile your income and expenses and compare it to your budget.
This can be done as often as tracking as soon as money hits your account or when you spend on something, every couple of days when you know you’ll have some free time, or even weekly if there’s a set time that works well for your schedule to devote to it. In the end, putting it on your calendar, being consistent, and making sure that you never miss twice are all important to make sure that you get positive results out of this system.
Check out my article here for some tips on how to get started with a successful budget and to learn about ways that you can make this system easier on yourself and more effective.
Make Saving Easy
Automation is going to be your best friend when it comes to setting up a savings system. Paying yourself first and making sure that you never see the money that you should be saving will make things so much easier on you.
The easiest way to set up a savings system is to set up automatic contributions to your employer-provided retirement plan such as a 401(k) or 403(b). Many retirement accounts also have a feature which allows you to choose to automatically increase your contributions each year without having to go in and make any changes by yourself.
Beyond saving into your retirement plan, you can also set up automatic contributions from your checking account to other retirement accounts such as an IRA or Roth IRA and to your savings account. Getting money out of your checking account automatically each time you’re paid will help to keep you from overspending while reaching your savings goals with little work from you.
It might not be earth shattering, but it works.
Automate Debt Payments
Your debt payments should be automated as well. (Are you seeing a theme here?)
Having a system in place that automatically pays off your credit cards in full each month if you use them will help you save money by not paying interest or late fees. Additionally, making sure that your other debt payments like student loans, mortgage, car loan, etc. are being paid automatically can help you to save time and money and make more progress than if you were to have to think about them every month.
You don’t have to have a complicated debt paydown strategy in place. What’s more important is to create a system that works for you and pushes you to reach your goals in an effective way with the least amount of potential for human error possible.
Track Your Progress
The best way to track financial progress is to track your net worth. Why? Because your net worth is a great measure of your overall financial health and will allow you to see the progress of your savings, investments, and debt paydown strategy all in one place. Again, this is something that can be automated through a service like Mint or Personal Capital (if you feel comfortable entering the login information to your accounts) or that you can do manually using a spreadsheet.
Tracking your net worth monthly will show you the overall direction that your personal finances are heading and if changes need to be made. This also gives you a chance to look things over and make sure everything looks right and that there aren’t any suspicious transactions that have taken place or that you haven’t been hacked.
Find a method of tracking your net worth that works for you and set an appointment on your calendar each month to update it. I’ve been updating my net worth spreadsheet the last day of each month since I graduated college and seeing the continued progress is a great source of motivation.
Systematize Your Financial Progress
Having the right personal finance systems in place can help you to make progress towards your financial goals with the least amount of effort from you possible. Automating good personal finance habits and eliminating as many excuses and barriers to making progress as possible is key to creating a successful and sustainable financial life.
