Disorganised finances

on September 15, 2021 / by Financial Mindfulness

Disorganised finances.

A persistent, nagging fear of money is all too real for many people.

The medical word for it is Chrematophobia, also known as Chrometophobia and its sufferers have a much higher likelihood than average to experience financial stress.

The individual reasons are probably as varied and nuanced as the number of sufferers, but it’s a reasonable assumption that we haven’t learned how to manage money effectively.

One way to consider the fear of money is to ask: how many with such fears are disorganised with their finances?

We’re not suggesting an answer to Chrematophobia – we’ll leave that to you, your financial counsellor, and even your psychologist.

But we can help encourage people to look at the widespread issue of disorganised finances.

Why does it happen?

For some, it will be deep-seated issues, and again, we won’t go into that. But it’s worth considering whether you do fall into that camp before considering the next point – and getting extra help if you do.

Avoiding our finances to the point they become disorganised can feel strangely empowering in the short term.

We all know that feeling: ‘I don’t have to do this difficult thing if I don’t want to or maybe ‘This is boring/hard/exhausting, so I’ll get back to it tomorrow/next week/next month’.

This is avoidance, with more than a little misguided rebellion at its heart.

Whatever is underneath our avoidance of maintaining our finances, the result is often the same: it’s a bit of an ‘own goal’.

‘It can be a bit like a teenager not wanting to clean their room. They don’t see a need for it,’ says Hamish Ferguson, a Director at Vision Property and Finance.

It is frustrating when they can’t find an important document or number, but unless it becomes a large enough pain point, people generally don’t – or won’t – understand the need and don’t make it important.

One thing we all have, of course, is plenty of distraction these days.

There are usually too many other things we believe need to be done now or make more important – and we focus on those instead of our finances.

“Examples could be keeping the boss happy, dealing with children or a spouse that wants attention or even just allocating time to more pleasurable activities such as TV, time with friends or outdoor activities,” says Mr Ferguson.

The link between financial stress and disorganised finances

If we don’t pay attention to our finances, they don’t usually improve. This may seem obvious,s but it’s important to act on it.

Paying no attention to our financial situation means some form of financial stress, and even distress becomes inevitable.

If you can’t see this coming, you probably need some new habits with money!

“Generally, the more stressed we are, the less logical we think and or the more disorganised we become,” Mr Ferguson says.

With a stressed mindset, we don’t tend to manage our time well because we spend more time on the stressor than the solution.

“We often fail to realise that being organised with money will reduce the time that we tend to think about money, which should give us more freedom and time to spend in more pleasurable areas,” Mr Ferguson says.

The importance of regular routines around money

The busier we are (or more’ time poor’ we are), the more important having healthy routines are.

Most people can recognise that sense of not having enough time in the day.

“So, building structure and routine around our finances is essential,” Mr Ferguson says.

Some examples of healthy routines with money are:

• • ​Review bank statements and credit card statements every month so we know what we are spending money on and the amounts;
  • Review repeating expenses and reflecting on whether we are using what we are paying for effectively. Gym memberships are a good example, as are streaming subscriptions;
  • Compare bills to prior ones so that you can be aware of any increasing expenses and spend some time thinking about why this is occurring;
  • Review all significant items that may need to be renewed over time. This could be a car, fridge, hot water system, maintenance on the house. Come up with an estimated time before money would need to be spent and start to put a savings plan in place around this; and
  • Start and maintain a budget.

What’s a good place to start if my finances are disorganised?

“Being disorganised with finances is often an indication that bills are not being paid on time, savings are limited (or even non-existent) there isn’t a savings habit or goal,” Mr Ferguson says.

When we experience any bill as an unexpected expense, we need new habits with money and quickly.

In the most basic terms, a person disorganised with finances often doesn’t know how or where to allocate money helpfully over the long term.

Becoming organised would mean thinking about the following:

• • Knowing where all my documents and paperwork are – physically, digitally and online;
  • Having a regular time to sit down and examine the bills or expenses that I am incurring;
  • Understanding what my costs in life are;
  • Having financial goals; and
  • Managing the difference between my income and expenses

Once or twice a year, it is helpful to sit down and analyse three months’ worth of transactions.

If this seems too onerous, looking at some software to help you be proactive here may be worth considering.

Also, many banks now offer basic cashflow analysis.

“Are you using the free tools available to you? There are plenty,” Mr Ferguson says.

A final word on goal setting.

‘This is very, very important,” he says.

Financial goal setting actions can be as simple as looking at major expenses on the horizon and breaking down the need into weekly or fortnightly amounts to putting away can help become organised.

But they can also be empowering when we look forward to what we want to do with the next 5-10 years: buy a property? Travel? Open a business?

The possibilities become almost endless when our finances become organised, and we can start making financial goals and achieving them.