Take Control of Your Finances: Get Organized

You’ll be surprised to learn how getting organized can improve your financial outlook. Get ready to reap the rewards after following these three easy steps to organizing your financial life.

If financial well-being seems out of reach and you feel you’ve lost control of your finances, you may merely need to get organized. Organizing your financial life can save you money and help you reach your financial goals faster. Mostly, being organized will give you a feeling of control of your money and that alone can reduce financial stress. Here are three steps to organizing your financial life:

1. Get Organized at Home

Organization is always easiest when you start with the basics. The basic materials for your financial life are documents related to your bank accounts and other financial holdings and investments. Keeping the physical documents of your financial life organized begins with creating some organization at home.

  • Keep Bills in One Place: Designating one place for specific items is the key to not losing things. If you group all the similar items together in one place, you’re more likely to be able to find them when you need them. Keeping track of your bills is essential to paying them on time and building good credit. Establish one place where you put the bills when they come into the house. That location should be private from visitors, of course, but prominent enough that you will see it frequently, so it serves as a physical reminder of bills that need to be paid.
  • Keep Track of Financial Documents: Bills are not the only financial documents you need to keep track of. Account statements, mortgage documents, insurance policies, and other similar papers are related to your financial life. Set up an organized filing system to keep track of all these documents. You can use a file drawer or scan them into your computer and maintain digital files. No matter where you choose to file these documents, keep them arranged by account and date.
  • Create a System for Addressing Important Mail: Whether you pick up your mail at the post office, the post boxes in your building lobby, or a mailbox at the end of your driveway, what you do with that mail once it comes into your home is most important. Some of your financial mail will require you to take action, like paying a bill or making a phone call to activate a credit card. Other pieces of mail just need to be filed for your reference at some point in the future. To keep your financial life organized, deal with incoming financial mail the same way every day. Maybe you put it in a pile and deal with it on Saturday morning, or perhaps you separate the bills from the account statements and put them in their designated places immediately. Figure out what works for you and do it that way every time.

2. Simplify Your Financial Life

Remember when life was simple, and your only real financial responsibility was deciding how much of your babysitting/lawn mowing money to save? Then you added making your car insurance payments and you moved out of your parents’ house and added rent to the mix. Or you got a second job for added income, tuition payments, a mortgage, college loans, credit cards, and the list goes on. As you go through life, it’s easy to see how your finances can get complicated and you begin to feel disorganized.

Simplicity is a key component of organization. If you create complex procedures for yourself to handle your financial documents, you’re not likely to follow them for very long. In the same way, if you open accounts and credit cards in various financial institutions, you will have a lot more to keep track of. No matter how you got to this point, here are some ways to simplify your financial life:

  • Reduce the Number of Accounts: Consolidate things where you can. Most people only need one checking account, one savings account, and one credit card. See if you can close or consolidate any additional accounts you have. If you had a retirement account with your last employer, talk to your financial advisor to see if it is best for you to roll the old one into your new job’s account to keep all your retirement savings together.
  • Use Direct Deposit: If your employer offers direct deposit, take advantage of it. Not only will that cut out some paper transactions, but it will also help you stay more organized. You can set up your payroll to deposit a portion of your check into your checking account, some into your savings account, and a percentage into your retirement account – if that’s not automatically deducted for a 401(k). That makes three financial responsibilities handled every month without you doing anything.
  • Make Automatic Payments: Automatic payments are another convenience that will simplify your financial life. Use this tool with bills that are the same every month, like your phone, car loan, or cable bills. Sending the payment automatically from your bank account will save you time and effort remembering and processing the payment, and help you avoid late or missed payments.

3. Manage Financial Goals

Keeping your financial life organized in the long-term means setting and achieving goals. You always want to be striving for something new in your financial life, and managing your goals is how you get there. Here is the cycle of organization you should maintain around your financial goals:

  • Track Your Spending: This will give you a surprising sense of control over your finances, even if you earn just enough to cover your expenses. Keep a spreadsheet, or use an app, to record what you spend money on each day, broken down into categories like food, rent, and healthcare. This practice will help you see where your money goes, and it can be the basis of a budgeting technique.
  • Budget to Achieve Goals: Your budget should grow out of your spending tracking. Determine your next goal – a bigger house, a new car, a family vacation. Figure out how much it is going to cost, and that becomes your financial goal. Look at your spending tracker to determine how you can change your spending habits to save for your new goal. You should be able to calculate rather accurately how much you can save each month and when you will reach your goal.
  • Always Set New Goals: When you reach your financial goal, set a new one. Financial goals will motivate you to save and achieve. Want to feel in control of your financial life? Always have one financial goal you are working toward.

Whether your financial life feels a little out of control or it feels like a lost cause, you can improve your situation by getting organized. Your biggest expenditure in getting organized is time, and it is well worth the time to reduce your stress and put yourself on a path toward financial well-being. If you need more help getting your financial life organized, contact your financial institution for the tools and guidance that can help you get it done.

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