How to Get Your Finances Organized

The world of money management can be a confusing labyrinth, especially if you have a personality type that doesn’t lend itself to orderly bookkeeping. Organizing our finances is something that we all know we need to do, but either through lack of knowledge, lack of interest, outright procrastination, or something in between, we many times don’t perform the proper follow-through to actually get it done and stay on top of it. A lot of times we don’t realize how important it is to keep our finances organized until we are faced with a major financial decision such as purchasing a home or applying for an auto loan. Getting your finances organized will also help you in general as you will normally see fewer bounced checks, fewer late bill payments, and less overall confusion about where your money is going. This article will provide you with helpful tips on how to get your finances organized, so that your financial life will run like a well-oiled machine.

Difficulty: Moderate

Instructions

Things You'll Need:

• A fireproof safe or box
• Plenty of file folders, file folder labels, and hanging file folder holders
• A file cabinet

1. Every bill must have its own file. This includes everything from your normal utility bills (i.e., electricity, gas, water, cable, internet, etc.) to your revolving credit card accounts, to your monthly car payment(s), to any other type of financial obligation that requires you to put out money every month to maintain. You can pick up a cheap set of file folders and file folder labels from your local big-name retailer (the red one or the blue one, you know who I’m talking about). It would also be good to get a basic file cabinet with hanging file folders. You can usually find a smaller sized file cabinet for under 50 bucks, so this won’t be a heavy strain on the budget, and it will be well worth the investment.

2. Once you have your basic equipment (file cabinet, file folders, file folder labels and hanging file folders), create a file for each bill that you owe. As far as what to put on the label, put the name that you most easily associate with that bill. In other words, if you call the power bill “the power bill”, or if you refer to it by the name of the utility company (i.e. “ABC Power Co.”), put whatever one best connects your mind to the bill. In my household, I always call the water bill simply “the water bill”, but I refer to our car insurance by the company name, and that’s exactly how my folders are labeled. Then, organize the folders alphabetically.

3. Create a “fact sheet” or an “account profile” for each bill that you have. This sheet should contain the vendor name, account number, your contact information that the vendor has on file (pay special attention to email addresses), total outstanding balance for each one, and regular due date for paying the bill. Also include any usernames, ID’s, and passwords for your online accounts. Trust me, this is tedious work, but just doing this exercise alone will begin to make you feel much more in control of your finances.

4. Create files and profile sheets for each bank account that you have, as well as any brokerage accounts, IRA accounts, or any other type of financial institution that has any of your money (including insurance companies and the like). Include them in the alphabetized files as well.

5. Make sure to file away new incoming mail as it comes in. Don’t allow the mail to pile up all over your countertops and nightstands! You’ve created the files for each piece of mail; now simply follow the system you have created. When you file them, it’s a good idea to put the most recent documents/statements near the front of the file folder so that you can keep things in chronological order.

6. Any time you make a call to one of your creditors, financial institutions or utility bill vendors, make sure to write notes about the conversation (including who you talked to, the date & time, any confirmation numbers of any transactions, etc.) and file them away as well. This is especially important when it comes to receiving calls from creditors.

7. Stay on top of tracking your spending, especially if you use a debit or check card often. It’s easy to just swipe away without really taking the time to reconcile your account ledger with what you’re spending. Save every receipt until you have updated your ledger.

8. Any highly sensitive personal documents such as birth certificates, life insurance policies, Social Security cards, bonds or stock certificates, marriage license, your personal will, etc. should be stored in a fireproof file cabinet or a small fireproof box with a combination lock. Make sure that you write down a “summary sheet” of all the documents that are contained in the cabinet/box, and make a couple of copies to give to close relatives (spouse or children). That way, if anything happens to you (God forbid), your family will know exactly where to find these important documents.

Tips & Warnings

• Take your time to do this right, even though it will be tedious. The hardest part is always making that initial "push" to set things in order, but once it's done, you'll feel much more at peace about your personal finances.