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Organizing Your Finances in Eight Easy Steps

Posted in: Money Management, Q&A

If you’re like most people, the prospect of organizing your finances is daunting – to say the least. When faced with stacks of account statements, credit card due dates and household bills, it may seem easier to shove it all in a file and close the cabinet drawer. But ignoring your finances and wishing the bills away is never a good formula for financial peace of mind.

People who are financially stable rarely get there by chance. Rather, it’s the result of planning, persistence and discipline. Borrow a page from their playbook with these simple steps to get your finances in order.

  1. Set a goal. Before beginning the task of tackling your finances, set a goal to guide your efforts. Whether paying off credit card debt, saving up for your dream vacation or buying a new car, put your goal on paper to help you stay on track.
  1. Track your spending. To really get a handle on your finances, you need to figure out how you’re spending your monthly income. Track your expenditures using a spreadsheet, smartphone app, or even pen and paper. In a matter of weeks, you’ll have a good snapshot of your expenses – and you may realize you can meet your financial goals more quickly with just a few tweaks.
  1. Build a budget (and stick to it!). This is the broken record of all financial tips – but that’s because it works! Use your computer, a notebook, or choose from dozens of budgeting templates online to determine how you will divvy up your monthly income to pay your expenses. Learn more about building a budget.
  1. Keep unpaid bills in one spot. Many people are late on payments simply because they misplace or forget to pay their bills. This can wreak havoc on your credit score – not to mention your peace of mind. Place all paper bills in one central file until they’re paid, and create an email folder for any electronic invoices you receive.
  1. Pick a day to pay your bills. On one designated day each week, review your paper file and email folder, and pay the bills, either by mail, phone, online, or through your bank’s automatic bill pay.
  1. Create a filing system. Create a separate file for each credit card, insurance policy, bank account, auto loan, etc. It may make sense to designate one day a week to do your filing and keep it from piling up. If you prefer to keep soft copies of your statements, sign up for electronic statements where possible, and scan paper statements to save in your computer-based filing system.
  1. Consider a shredder. Don’t let financial documents stack up. For statements and bills that don’t need to be filed, invest in a shredder and shred them right away. You should also consider shredding credit card offers, as the point here is to use your money wisely – and that doesn’t include accruing new debt.
  1. Pay yourself, too. No budget is complete without a line item for savings. Whether establishing an emergency fund, paying into a retirement account or saving up for a big purchase, you’ll enjoy watching the dollars add up with a payment to yourself each month.