Organizing your finances can be thought of as the adult’s equivalent of cleaning your bedroom. It’s a task that’s often unpleasant, but nevertheless, must get done. Just as your mother would never tolerate a messy room, you should never be content to hold your financial life in a tattered shoe-box. While these kinds of stop-gap solutions may have worked in college, they are not the ideal way for responsible adults to keep their finances in order.
But there’s hope: with the right steps and just a day or two of your time, the chore of organizing your finances can be tackled rather painlessly.
Select Your System
(DeclanTM)
The first step in organizing your finances is getting set up with a system. The old method of hanging on to receipts and keeping a checkbook is outdated, 20th century technology. All of this manual effort can be seamlessly automated these days using free services like
Mint.com. With Mint, you do all (or most) of your spending on credit or debit cards and it gets recorded for you automatically.
In addition to merely recording transactions, these types of services will actually categorize your spending for you. You will always know, for instance, how much was spent on “food” or “entertainment” in a given week, without ever having to analyze or tally up numbers by hand. This step alone will go a long way toward shoring up your finances.
Consolidate Spending Onto One, Good, All-Purpose Credit Card
(The Consumerist)
Another excellent way to make your money more manageable and organized is to do all (or most) of your spending on a single, wisely-chosen credit card. Take some time to research the different cards that are out there and pick one with a rewards program that you will actually use and benefit from. Then, get into the habit of putting all spending on this card. Note, of course, that we are not suggesting you rack up debt. We’re talking about normal, ordinary spending you would have done anyway, like bill payment (more on that below.)
What this will do is: 1) contain your entire spending history on one credit card for easy review, and 2) allow you to accrue rewards much faster without increasing your spending.
Automate Bill Payment
(meddygarnet)
Scrambling to write out checks to bill collectors on the due date is another old-fashioned practice to abandon. In 2010 (the era of free online bill pay) there is no excuse not to fully automate most of your bill payments. This includes:
- Rent
- Cell phone
- Car insurance and/or car payment
- Cable
- Gym
- Netflix
- etc.
The trick to pulling this off is getting each bill to fall on or around the same day of the month. Instead of worrying how much money is in your account on the 5th and the 7th and the 10th and the 14th and so on, just call up each company that bills you and ask for a new, uniform billing date. Then, it’s just a matter of making sure there’s always enough money in the account on that day to cover them all. And you never have to think about bills again.
Switch to Online Bank Statements & Billing Notifications
(WordRidden)
Organizing your finances is also about reducing clutter, and there’s no quicker way to accomplish that then switching to online bank statements and billing notifications. Prior to this wonderful innovation, it was common to get mail seemingly every day with “important account information” of some kind. If you’re like most people, these envelopes usually got tossed into the proverbial filing cabinet or shoe-box to be dealt with on a day when you “had some time.” In other words, never.
Swap this wasteful method for online statements and notifications. If it helps, set up a separate e-mail account that receives no mail other than these. This way, if you ever need to pull up a statement, you know exactly where they all are and can effortlessly search through them.
Set Up An Organized Filing Cabinet
(Marcin Wichary)
While it is preferable to keep most of your finances online, having hard copies of key items is still essential. The fact that “the computer has a virus”, for instance, should never keep you from putting your hands on a copy of last year’s tax return. Ditto for your mortgage payment history. When it comes to crucial documents such as these, nothing can replace the good, old-fashioned filing cabinet.
Don’t make this any more complicated than it has to be. Your filing cabinet does not need to look like the Library of Congress. Instead, simply divide it up in whatever way is most logical and helpful for your own finances. At a minimum, this will probably include:
- Dividing each year into its own folder or section
- Keeping like documents with one another (ie, tax stuff with tax stuff, mortgage documents with mortgage documents)
- Periodically reviewing the cabinet and purging it of old, outdated or unneeded paperwork
About the Author: Jessica Bower is a freelance writer for Quicken. Quicken offers personal finance software that makes money management easy. Quicken’s products help people get their spending under control with helpful budgeting tips.