Have you ever received a bill in the mail, set it aside, and then days later forget where you put it? I know I am not the only one who has misplaced an important piece of paper. Having an organized financial life will not only save you money in late fees but also the headache of overdraft accounts and misplaced bills.
An organized financial life does not have to be difficult. You’ll want to set aside just a few minutes each day to ensure your finances stay on track!
HOW TO HAVE AN ORGANIZED FINANCIAL LIFE
Create a Monthly Budget and Review it Frequently
I highly recommend setting up your budget before the month begins. Track transactions as they occur and be sure to review your budget frequently. It is difficult to keep track of your income and outgo if you are not diligent about tracking your finances.
This is where my favorite budgeting software comes into play – You Need A Budget or YNAB for short.
YNAB is a bit of a different beast when it comes to budgeting as it teaches you to only budget the money you have on hand. This will force you to look at your finances in a different way because it will become impossible to overspend. YNAB also forces you to check in with your budget frequently. You will want to import and categorize your transactions at least weekly to ensure you are on track.
You can read all about YNAB here: The Best Budget App to Manage Your Money is YNAB
If you prefer the traditional route of budgeting I have a solution for that as well. You can download my free budgeting worksheets by filling out the form below. These sheets will allow you to forecast for the month ahead and track what was actually spent. You will still want to keep track of your expenses throughout the month to ensure your budget is correct.
Have a Set Location for Your Bills
I prefer to keep our bills in the electronic format. The bill stays in my inbox until it is scheduled to be paid. Once it is paid I then delete it. Since all of my accounts can be accessed online I do not feel the need to keep the bills.
You may be more inclined to save the electronic bills. Create a folder on your desktop to save your bills with confirmation numbers etc. Just have a designated spot on your computer for them. The cloud is a perfect spot because you will be able to access the bills from any device. My preferred cloud storage is Dropbox.
If you still receive paper bills have a designated spot in your home for them. This may be somewhere like in a folder that you keep in your office.
When you are done with the paper bills be sure to shred the paperwork. This will help cut down on the chances of identity theft.
Create Financial Goals
Once you have your budget in order and a system for your bill paying then you can look past your immediate needs.
An organized financial life has money goals. What do you want to accomplish and what is your timeline? Those two pieces are key to creating good goals.
Be sure to check back in on your goals often and update them as needed.
You may have a goal to buy a new car or save for a downpayment. Once you meet these goals you will want to remove them from your list and maybe replace them with another goal. The decision is ultimately yours and what you want your life to look like.
If you need help creating S.M.A.R.T. Financial Goals you can read this post: 10 Smart Money Goals to Crush in 2019
Consolidate Your Accounts
Now that we have the basics down of budgeting and keeping track of your bills it is time to dig a bit deeper.
When you wrote your budget were you surprised how many credit cards you have open? How many bank accounts there are to track?
Once you have a handle on your budget and are confident in your money handling skills it is time to consolidate your accounts.
- rolls over your 401k from a previous employer (talk to an investment professional to find out your best moves for this!)
- consolidate high-interest credit cards into a personal loan or a low-interest credit card
Update Your Accounts
When you have an organized financial life you’ll want to keep your accounts up to date as much as possible.
- update beneficiaries on insurance policies
- update beneficiaries on retirement accounts
- create or update your will
- obtain quotes for your car, home, and life insurance
- adjust insurance based on current circumstances
- check your credit report and ensure it is accurate
- review phone and cables bills to ensure you are paying for only what you use (this can go for all of your bills though!)
Track Your Net Worth
Now that your financial life is up to date you will want to track your net worth. I highly suggest doing this at least once a year if not more often.
Your net worth will give you the overall picture of your financial health. Net worth is basically your assets minus your liabilities. If your number is negative that means you are carrying a lot of debt (most likely) and have work to do. If your number is positive you are heading in the right direction toward financial freedom.
An organized financial life is essential for financial freedom.
When you first start gathering your bills and statements it will take you time to comb through everything. However, once you create your first budget and start tracking your income and expenses on a regular basis it will become much easier.
Your path to an organized financial life is an ongoing process that will never end. The sooner you start though, the better! You’ll be aware of your complete financial picture and will be able to make decisions based off of that knowledge.