No matter if the economy is bad or good, money seems to be on everyone's mind. And it isn't just "how to make money" that we think about. How to make the money we do earn work for us is an even bigger issue. When it comes to finances, most of us want to get the most bang for our buck. The easiest way to make that happen? Be organized. If you know where your money is going and why, chances are you will be better able to hold on to what extra cash you do have. Read on to find out how.
Remember that build up to the first day of school? Whether you were a great student or preferred to never set foot back in the classroom, it was hard to resist the pull of new notebooks and pencils. In that vein, when it comes to organizing your finances, nothing beats having the right tools.
Consider it an investment in your future. With the right system of folders, files and labels, not only will you know which bill belongs where, you will be better able to keep track of what has been paid and what hasn't. And nothing saves money like avoiding late fees for a missed payment.
Some main categories to consider for your filing system are: home, car, healthcare and insurance, credit cards and other debts, savings and investments, and taxes. It is a smart idea to start a new folder at the start of each year. By keeping your finances organized you will be taking the first step to getting control of your money.
Now that you have a system in place to organize your finances, it's time to do the dirty work of going through those piles of bills you have been trying to ignore. Be prepared to take some time. And like most cleaning efforts, expect it to all look messier before it gets better.
It may sound simplistic, but start by taking all the statements out of the envelopes. As you go through the bills, make three piles--pay, file and shred. Ideally, consider paying bills as soon as they arrive. This may prevent you from paying late or forgetting about the bill, and may go a long way toward keeping your organized.
Consider filing items like bank statements, 401K or other investment statements and any insurance information. Now that you have taken care of the pay and file stacks, you can start on the fun part--shredding! Investing in a shredder is a smart idea. This way you know that someone can't get any of your account information from your trash. Just another way to save money and time getting your identity back. And don't forget to recycle!
Just like starting a new exercise program, the key is to keep at it. The same holds true with your finances. If you don't keep up with your filing system, then your initial effort may not keep you organized.
When a financial document comes in the mail, take the statement out immediately and decide what needs to be done. Is it a bill that should be paid? If so, try and pay it right away or as soon as possible. Is it a statement that you need to keep for your records? Then file it in its appropriate file. Last, if you don't need it, shred it.
By handing your financial documents as they come in, you can stay on track with your financial plan. You also will probably cut down on some of the clutter lying around your house. Not a bad bonus at all. Again, like an exercise program, take a moment several times a year to re-evaluate and make sure that the plan is working for you. If not, make the necessary adjustments to keep your finances on track.
What if you have tried a file system before and haven't stuck to it? No problem, get creative and devise your own plan. Maybe you will simply create a "To Do" bin on your desk for bills that need to be paid if you can't pay them immediately. Or perhaps you will just toss all the papers you need to hold onto into a covered box or storage bin. It is less about the system you use and more that you have a system.
You can now pay many of your bills online. If this makes keeping up with your finances easier for you, then go for it. There isn't one right way to organize your finances. There is only the way that works for you. Find a system that you can keep up with and that covers all your financial bases. Do that and before too long, stressing about money might just be a thing of the past.
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