Financially Disorganized? Do These 3 Simple Things!

Are your finances a mess?  Are you completely disorganized?  Unfortunately, this is all too common.  You are not alone!  

This disorganization causes anxiety and results in placing your head in the sand about your finances.  Getting organized and seeing where you are currently with your finances is the first step in improving your financial path.  

Getting organized is one of the first things that happens when I start to work with a financial planning client because frankly, it MUST happen in order for me to help them effectively.  I have clients tell me afterward that completing this task is very impactful. For the first time, they have a clear picture of where they stand financially. 

Here are 3 simple things you can do to get your finances organized.

#1 List assets and debts on paper

Here you are creating your current net worth statement.  This big picture view can be enlightening.  

Take a sheet of paper and draw a line down the center.  List everything you own and the current value of each on the left side of the paper.  Do the same on the right side with all of your debts and the current amount you owe.  Now add up both sides and subtract the totals.  This number represents your net worth.  If you want, you can print out a blank form HERE to do this.

Doing this activity will serve two purposes:

First, your net worth is something you can track over time.  If you make good financial decisions, over time this number will increase.  Don’t worry too much about the current number or if you are not happy with it - it is what it is.  The past is the past.  The question is, will it be better five years from now?

The second purpose is getting you to decide the next action step(s) that you should tackle within your finances.  Look at this document closely.  What don’t you like about it?  What item, if you changed it, would make you feel better?  Analyzing it like this helps you determine what you should focus your attention.

#2 Organize financial documents

Is all of your financial mail in a drawer or box somewhere?  Do things get thrown away because you don’t know what it is or don’t know what to do with it.  Let’s change that!

I suggest some type of filing system.  It doesn’t have to be all that sophisticated.  A box of file folders and a place to put them is all you need.  The following broad categories should be sufficient:  

Estate planning

Within each category, you should probably have a file folder for each specific account.  For example, within Investments, you would have a file folder for 401k statements and a separate folder for Roth IRA statements.  The same goes for each type of insurance you have - homeowners, auto, life, etc.

Once you get this setup, the trick is to file things once you receive them in the mail.  Create a system for how you will do this.  For example, set aside one day each week to take your pile of mail and file it.  Or many of you will be more effective if you file daily as you open your mail.
If you have a scanner, you can do the above system electronically.  Just scan everything, and then file it away in folders in the cloud.  If you are like me, you get online statements from financial institutions anyway.  You can set up a system to review these statements and then save and file them electronically.

#3 Begin using Mint or some other financial aggregation app is a website where you can link up all of your financial accounts in one place.  This is an easy way to keep tabs on your financial progress ongoing.  If you link up everything, you will be able to track where you are spending your money and how your net worth improves over time.

Investments - 401(k), 403(b), Roth IRA, etc.
Credit Cards
Bank accounts

By linking up your credit and debit cards, you can keep track of where you spend your money.  Mint even categorizes it for you.  (It doesn’t do a perfect job, so you might need to do some adjusting if you want it to be perfect.)  You can create a monthly budget, and it will let you know how you are doing mid-month if you are overspending in certain categories. 

Your net worth will be updated daily if you are wanting to track that.

You can set saving goals for yourself and it will monitor your progress.
It even has a bill pay system where supposedly you can pay bills directly from Mint.  I personally have not used this so I have no experience of how well it works.

Staying organized gets easier all the time with these type of apps.  So take advantage of them! 

By the way, I mention Mint specifically because I have used them for many years.  There are many other similar web based platforms out there that do the same things.  They may be better for your family.

You are only one weekend away from getting organized!

If you set aside a few hours for two days straight, I bet you can get all of these three things completed, depending on your degree of disorganization.  

This is not much time to set aside in order to get on track with your organization.  How much would completing these make you feel?  

Print Friendly and PDF