At a time when financial wellness is becoming more of a priority for individuals and organizations alike, keeping your finances organized is a vital skill to have. According to the World Economic Forum, slightly less than half of US adults understand basic financial principles.
The damaging effects of financial disorganization include:
Late Fees & Penalties: Missed deadlines mean throwing money away on unnecessary fees.
Lost Opportunities: From expired coupons to unused gift cards, disorganization means missed savings.
Wasted Time: How many hours have you spent searching for paperwork or untangling a tax mess? That's time you could've spent earning money or simply relaxing.
Why Get Your Finances in Order?
Organizing your finances and having a plan for paying bills can have significant value for you and your family. When you keep track of your income, expenses, and savings, you can avoid the constant worry about unpaid bills, debts, and unexpected expenses.
A Simple Guide to Organizing Your Finances from Scratch
Now that you are motivated to start, what do you do next? A straightforward way to start is to create a personal financial inventory to help assess your current situation and plan for the future.
Below is a sample list of family and household financial records that you’ll want to have in order:
Credit and debit card statements
Student loan statements
Bank statements or any other savings accounts
Insurance documents for house(s), car(s), etc.
Personal insurance documents
Social Security Statements
Retirement account records
Investment account statements
Estate planning documents
Tax records
Homeownership deeds, mortgage statements, etc.
Any other important documents to evaluate debts or assets have for your household
Organize Your Documents in a Secure Place
Now that your list is complete, it is time to gather your materials. Maybe find a spot in your house to keep all these important documents together. A file cabinet, plastic file keeper, or even accordion folders are great ways to organize your important documents.
Here's a recommended step-by-step approach to get yourself organized:
Assess the Mess: Gather ALL your financial documents – bills, statements, receipts, everything. Don't panic; see the scope of what you're working with.
Categorize & Conquer: Sort documents into categories like income, investments, debt, insurance, etc. Organizing helps you see the big picture.
Choose Your System: Do you prefer physical files, digital storage, or a mix? Choose what works best for you.
Shred Old Documents: Securely dispose of anything outdated or unnecessary.
Keep Track of Your Expenses Moving Forward
Once you get all your financial documents together and sort them, you’ll want to monitor your expenses moving forward to stay on track.
Track Your Finances: Find a method to log your income, expenses, and debts. Tracking creates a crucial financial snapshot. Still trying to figure out where to start? Platforms like SAVVI Financial simplify tracking, planning, and taking action.
Automate What You Can: Set up automatic transfers for savings, bill payments, and investments. Alerts also keep things top of mind. Automation saves time and prevents costly mistakes.
Regular Reviews: Schedule regular financial check-ins to review progress, adjust budgets, and reassess goals. This will build good habits and keep you on track.
Seek Professional Help if Needed: If your finances feel overwhelming, don't hesitate! Contact SAVVI to schedule a touch base for personalized advice and strategies tailored to your situation.
The time and money you gain by getting organized will more than offset the initial effort. Think of it as spring cleaning for your finances!
Get Extra Help From a Professional
If you need extra help putting things in place, SAVVI Financial is here for you. SAVVI is a financial technology company that uses artificial intelligence and robust optimization to help individuals make better financial decisions. The platform offers tax-smart financial and benefits guidance and is available to individuals and employers.
As an SEC-registered investment advisor, SAVVI Financial is committed to providing its clients with high-quality financial advice and services.
