Organization Your Personal Finance in 4 Steps

When it comes down to it, personal finance has a lot to do with organization. You can make all the right decisions, invest in all the right places, and know about all the right options, but if you cannot keep track of it all it can turn out to be a lost cause. With that said, here are some quick and easy tips on organizing your finances and getting your money in order.

1. Sort Things Out

This is where you need to organize all your papers, folders, and receipts. Your file cabinet overflowing with useless paper is not doing you any good. So take a good half hour out of your day and sort everything into three separate groups. First you want to keep all the documents and papers pertaining to what you own together, such as your car, house, furniture receipts.

Second, you need a pile for financial information that deals with what you owe, such as mortgage payments, monthly bills, credit cards and so on. And your last pile should deal with all of your savings, such as retirement funds, bank accounts, and any other assets that are coming in.

2. Don’t be a Pack Rat

If you want your finances to be in order, it is very important to get rid of things you do not need. Phone bills from a decade ago are not necessary to have lying around. There is a fine line between purging and getting rid of useful stuff though, so go through everything carefully. While it may take time now, it can save a lot of time and hassle in the future.

Another great way to cut down on clutter is by taking advantage of putting a few accounts together. For instance, it may be a lot easier, and even save some money, if you put you and your spouse’s accounts together rather than deal with separate accounts. Put your cars together on one insurance policy, and consider consolidating old retirement accounts into one IRA.

3. Give Everything a Home

Try to organize your financial clutter in the same way that you organize household goods. Things that you use often are left out in the open, stuff you use less is stored in a closet, and rarely used objects are stashed away in the garage or attic. Apply this strategy to your financial records as well.

Keep short term investments and records for short term savings at the front of your filing cabinet, and your mind. For accounts that you use less frequently the paperwork can be stashed further back, such as college funds for your kids and retirement savings. Also try and make note and place tabs on all the information and records you will need to access when it comes time to do your taxes. While you may look at that as being a pain in the side, it will save hours come April.

4. Find Places to Save

So now that everything is a little more organized it is time to take a much bigger step. You have ditched unnecessary clutter and stored your important stuff in the right place, now you need to consider the easiest and best place to store your money. Your goal should be to make your money grow and that is why the perfect place to start is often your retirement plan, either a 03(b) or a 401(k).

IRA’s are often another good place to start if you are looking to watch your money grow over an extended period of time. You can start off with a discount brokerage account and take a big step towards future financial stability.

Make sure that you keep your short term savings in a separate place, such as short term bonds or a CD. You want this money to be accessible when you need it most. On top of those options, consider storing your emergency funds in a high paying savings account. This way you can get to it should you need it most, but it isn’t dangling in front of your eyes begging to be spent.

The key to true organization of your personal finances is to repeat these steps as often as you need. While following these steps will help you out, the bills and papers are still going to pile up pretty quick. Schedule a good clean out and re-organization every 6 months or so and you will be well on your way to squeaky clean finances.

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