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If the Foundation of Personal Finance is the Budget, Then What is the Survey?

When trying to explain personal finance to people, metaphors and analogies are often helpful in conveying ideas.  One of the most common examples is comparing a budget, or spending plan, to the foundation of personal financial practices.  A foundation in a home or building is the strong, basic structure upon which the more diverse, complex pieces are organized to ultimately combine into a full building which provides shelter, comfort, safety, entertainment and many other attributes for those who use it.  This is exactly why a budget is considered the foundation of personal finance, it is not glamorous and generally is very basic, but without a good spending plan (strong foundation), the remaining financial plans & goals (roof, walls, cabinets, and furniture) are virtually destined to fall apart.

However, one aspect often overlooked, is the lack of a performing a good survey of the land before beginning to build.  Google’s definition of a survey is: “examine and record the area and features of (an area of land) so as to construct a map, plan, or description.”  That sounds like it could be relevant!  Next step, tie it to personal financial practices.  How about “getting organized”?

Getting organized can mean different things to different people, and different people will certainly have different levels of organizational skills and habits.  Therefore, I would like to propose four simple measures everyone may benefit from.

  1. Establish a location for important documents.  Is this a binder?  A filing cabinet? An accordion folder?  That is completely up to you and dependent on your situation in life.  A young college student will likely have less need for space than say a middle aged business owner.  It could include such things as contracts, bills, pay stubs, tax documents, bank records, and important receipts.
  2. Create a checklist of your documents.  Do you have your will completed?  Who are the beneficiaries on your accounts?  What are your financial obligations and to whom are they owed? What numbers do you call if you lose your credit cards?  This is a quick reference list and may prevent having to rifle through the whole lot of records to get a small piece of information.  Just be sure to update it when you change your records.
  3. Create a schedule of your obligations.  Bills are pretty much just a fact of life, but getting lost in the “who, what, where, when and how” can result in much more than a headache.  Late payments are a major blow to credit reports and scores.  To help yourself avoid this, list out your obligations such as phone bill, utility bill, student loan payment, and any other place your money goes on a recurring, constant basis.  Consider things like “Who” the bill is paid to, “What” the amount is, “When” it is due, “Where” you send it, and “How” you pay it.  This can also be used monthly to keep track of what bills have already been paid.  And, you may even find places to cut back on spending!
  4. Clean it out every so often.  This may be one of the more touchy aspects to this tip, because everyone has different motivations for keeping the things they think are important.  I can only recommend educating yourself on what suggested time lines are for maintaining documents and using your own judgement.  Ideally you strike the happy middle ground between not keeping enough, and keeping too much, which on either side can result in the inability to properly plan and weather a strong financial storm.

Those are four relatively easy steps to help get started with, or shore up, healthy personal financial practices.  Sometimes though, the challenge of figuring out where to get started can prevent taking any action.  If you find yourself in that situation, you may benefit from seeking the guidance of others who are skilled in this area of expertise.  One FREE resource available to the Students, Staff, and Faculty of the University of Missouri is the Office for Financial Success (OFS).  The OFS is staffed by highly capable, compassionate volunteers who understand these types of problems and seek to help others unravel the mysteries of personal finance.  To make an appointment for yourself, or to learn more about us, please visit