With the New Year upon us, you’ve probably made — or thought about making — some resolutions. “Getting organized” is a common goal, but you may not have considered it in terms of your financial life. Though it’s often overlooked, getting your financial documents in order can be an important step toward achieving your overall financial goals. Resolve to get your documents in shape, and you’ll position yourself to reap rewards now and in the future.
The right tools for the job.
Think about all the time you’ve wasted and the stress you’ve felt trying to find bills, statements, and receipts. An easy way to solve this problem is to keep all of your financial papers in a file cabinet, separated by category. Name and organize the categories in a way that makes sense to you. Here are a few suggestions to get you started:
• Brokerage account statements
• 401(k) plan statements
• Bank statements
• Payroll statements
• Tax returns and information
• Retirement account documents
• Mortgage or lease agreements
• Loan documents
• Credit card statements
• Insurance policies
• Bills (separated into “to be paid” and “paid”)
Your filing system can be as complex or as basic as you like. You may decide to create subcategories within your file folders or simply stick with a few general categories. And, don’t forget to keep those receipts for tax purposes. The 2015 tax season could be easier if you get organized now.
To cut down on the amount of paper you have to organize, consider taking advantage of an electronic filing cabinet for account statements and other documents. Your financial advisor or tax professional may have such a system in place. Remember, keep it simple! Whatever filing method you choose, the system has to work for you in order to work at all.
Get into the habit. Once you have a place for everything, take time to gather all of your documents and put them in the right spot. As you receive bills and statements, be sure to file them promptly. You may discover that keeping track of your bills encourages you to take a closer look at your expenses. Plus, having all of your documents handy when tax time rolls around is priceless!
Here are some tips to help you stay organized in a few key areas:
• Your bills. For recurring bills, you may find it worthwhile to set up automatic payments online with your bank. Just remember to track these payments as you would any other transaction. Making a list of your automatic payments and storing it in your filing system is a smart move. Try placing reminders on your calendar so you remember to pay bills on time to avoid late charges or delinquent entries on your credit report. If you have many bills due at the same time every month, consider saving ahead so you have enough cash on hand when needed. Managing your debt and paying off credit cards monthly goes a long way to creating financial freedom.
• Your will. Although you might try to avoid thinking about your will, it’s important to keep it up to date in case the unexpected happens. Store the original in a safe as copies are not enforceable. Keeping your will with birth certificates, marriage certificates, life insurance policies, and other such documents will help you keep track of them. Consider purchasing a fireproof safe which you can keep in your home and be sure to inform a family member of its location. Depending on the size you need, they are priced at about $20 and go up to about $100, and can be purchased at a local office supply store or online.
• Your advisors’ information. To save yourself time searching for their phone numbers, create a list of contact information for your professional advisors, such as your financial planner or investment advisor, attorney, and accountant. Consolidating this information will also help your loved ones locate important numbers in case of an emergency.
Stick with it!
Getting organized may seem like a daunting task, but devoting a bit of time to it each day will benefit you in the long run. Soon, you’ll find that organization has become a habit, and you won’t want to return to the stress of a cluttered financial life. While it may take a few hours to get started, in the end organizing your documents frees up your time and energy to focus on doing the things you enjoy. Maintaining integrity around your finances can give you the freedom to start impacting your savings goals — or completing some of those other resolutions!
Beth Jones, RLP®, AIF®, CeFT ™ is a Certified Financial Transitionist, a Registered Life Planner and independent Financial Consultant with Third Eye Associates, Ltd, a Registered Investment Adviser with offices in NYC, Washington, DC and New York’s Hudson Valley.
She can be reached at 845 – 752-2216 or at: