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How to Keep Your Finances Organized in 4 Steps

By in Money Management, Personal Finance, Tips | 13 comments

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Seems as if we’re all busier than ever. With family, work and household chores, there’s little time left to keep your finances organized. Yet, if you don’t organize your finances then you might end up with unpaid bills, spending more than you earn, big credit card balances and a hornets nest of problems come tax time. Whether your net worth is in the three, four, five, six or seven digits, you still need to create a system to keep your finances organized. 

1. Categories to Keep Your Finances Organized 

Before diving in with a plan, understand the components of your financial life:

  1. Budgeting – Formal or informal, you must make sure you have more money coming in than going out.
  2. Bill pay – Bill pay is the most frequent money task with most bills coming due monthly. 
  3. Saving – Saving should also be a regular financial goal. 
  4. Investing – Investing can be regular or periodic.
  5. Taxes – Taxes are due annually yet tax prep is a year round task. 

4 Steps to Perfectly Organized Finances - The start to growing your net worth.

2.  Start Keeping Your Finances Organized Now

You can’t keep your finances organized if you don’t know what you own and what you owe. So, the next step is to list all of your financial assets:

  1. Checking Account
  2. Savings Accoount
  3. Loan Account
  4. Credit Card Account
  5. Investing Account
  6. Retirement Account
  7. Other

By tracking each of your financial accounts, you’ll get a good picture of your financial status or net worth, today. Ultimately, you want your net worth to increase. And that’s the goal of  keeping your finances organized. 

You can start out creating your net worth or financial organization “big picture” by simply listing on paper or a spreadsheet the amounts in each debt, saving and investing category. Or, dive into a financial tool to keep your finances organized.

3. Where to Keep Your Finances Organized

Let’s go through some of the best financial organization tools.

Personal Capital Dashboard – This is my number one favorite if you have a net worth greater than a few thousand dollars. I’ve used the Personal Capital Dashboard for several years and the integration and updates are seamless. And, it’s free. After linking your accounts, fast, you have access to an amazing financial management toolbox; Account balance tracking, income and spending reports, investment check up and analysis including asset allocation view, investment fees, retirement planning calculator and net worth chart.

Sign Up for Personal Capital

Quicken – This is my second favorite way to keep your finances organized, predominantly because I’ve used it for decades. You buy the software and Quicken has a wealth of features and reports. I’ve used it to organize my budget, saving and investing accounts. Additionally, the reports are extremely helpful during tax season. I occasionally have difficulty downloading credit card transactions, unlike Personal Capital. 

Mint – Mint is also free, like Personal Capital, and best suited for those without large investment portfolios. Mint shines for budgeting and expense tracking. Mint also helps you create and manage goals and monitor your credit score.  Mint also offers alerts, such as over budget notice and bill reminders. Unlike Personal Capital and Quicken, Mint lacks reports and top level investment features. 

4. How Long Does it Take to Keep Your Finances Organized?

As with anything new, set up takes some time. Each of the three financial organization systems takes some set up time. Personal Capital is the quickest with Mint a quick second and Quicken in third place. The simpler your current financial picture, the faster the set up. And accumulating more assets is a double edged sword. It takes longer to oversee a net worth of $2,000 than it does a net worth of $20,000, $200,000 or $2 million

Bills – 30 to 45 Minutes per Month

  1. When they come in the mail or your email in-box, put them in one place. I use a small file on my desk. For email, use a labeled folder.
  2. Schedule bill pay on your calendar.  My mom pays them as soon as they come in, but that is inefficient! I called the companies to synchronize the due dates with our income. Thus, I pay bills monthly. You might want to pay bills twice a month if that’s when you get paid.
  3. To automate of not? You can schedule your bills to be automatically paid. The advantage is that it saves time and you won’t forget. The disadvantage is that you may pay less attention to the bill amount if it’s automated. I only automate my mortgage, a credit card and utilities. And I monitor the bill amounts. 
  4. Set up “free bill pay” at  your bank. First you set up all the payment details. After initial set up, you just log in, schedule payment date and amount and click send.  
  5. For record keeping put the bills in a folder labelled receipts or paid bills. Place taxable bills, in a folder labelled taxable expenses. Or just keep an e-file on your computer.

Investments – 1 Hour per Quarter

I know I’m going to get some flack for this; especially from those of you who check their net worth monthly or more frequently. I recommend updating your investments quarterly or less frequently. With the automated systems, its easy to download financial asset prices dividends and interest. In fact, John Bogle, founder of Vanguard Investments once said that if you’ve set them up properly, you don’t need to check your investments until retirement. Although I think that might be a bit extreme.

Nevertheless, if you’ve set up an asset allocation and automated your investing, then there’s no need to worry about investment values. You understand they’re going to vary and you don’t want to over-react to the normal market ups and downs.

Just to keep your records clean, update your investment accounts 4 times or less per year. Annually, you may want to rebalance your investments back to their original asset allocation. 

For tax purposes, keep a copy of all buy and sell transactions in a secure location. Personal Capital and Quicken reports can help with this record-keeping.

Credit Card Statements and Bank Accounts – 15 – 20 Minutes per Week

  1. Download banking transactions once or twice per week to check accuracy and balance. If you don’t use a debit card much or make a lot of withdrawals, check less frequently.  
  2. Reconcile your account monthly. Quicken reconciles the account on-line in seconds and Personal Capital keeps the accounts updated every day.

Taxes – Time Commitment Varies

  1. When tax related items, W-2’s, 1099’s etc. come in during the beginning of the year, place them in a file.
  2. If you do your own taxes it’s useful to use a tax prep program. Many programs import required information from an automated system such as Mint or Quicken. Depending on the complexity of your situation tax prep could take from a couple of hours to a few days.
  3. If you hire a tax preparer. Take your tax related income and expenses list to your tax preparer. Make sure to check the preparer’s work for accuracy before you send the return to the IRS.

How to Keep Your Finances Organized Wrap up

Keeping your finances organized is a housekeeping job that is an inconvenience, yet ultimately makes your life run smoothly. If you’re looking to build wealth, you need to prioritize ways to keep your finances organized. And while you’re at it, set a few financial goals. It’ll keep you motivated towards financial security. 

 

*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.

    13 Comments

  1. Start small, just do one step at a time.

    Barb

    November 17, 2010

  2. Wow- this is a nice little summary of how to organize your finances 🙂

    Every time I have a receipt I would like to save for my taxes, I put it in a tax folder.

    I sort my paycheques and credit card bills in each envelope and sort them chronologically.

    I do a “net worth calculation” every month to make sure all my investments are still performing as they should.

    I love organizing my finances! (kind of sad, I know… wish it would be a more socially accepted hobby lol)

    youngandthrifty

    November 17, 2010

  3. Great post. I have my bills automatically deducted, so I have to make sure I check my on line account at least weekly to make all the proper credits. I also put all tax receipts immediately into my tax folder for that year.

    I have gotten a bit behind on my investments lately. I need to really look into the system for that.

    Everyday Tips

    November 17, 2010

  4. I have coordinated my bills within a 2-week time frame, so most of them are due around the 1st and the 15th. That way I don’t have to worry about paying bills more than a 2 to 3 times per month. As for checking my balances and investments, I’m probably checking my bank balances too frequently, and my investments too rarely!

    Little House

    November 18, 2010

  5. I like to centralize all my accounts if possible. I also use electronic payment (cc or debit) 99% of the time in order to easily track where the money is going. All you need is excel and you’re set to micro-manage every dollar if you so wish!

    BeatingTheIndex

    November 18, 2010

  6. @Young and Thrifty- Wow, you are super organized, great job! (I think you and I are in the minority in actually enjoying this task) 🙂
    @Everyday-I think having bills paid automatially is a great convenience! Like you mentioned, it doesn’t mean you can totally forget them,you still have to check to verify accuracy. wrt to your investments, if you are in for the long haul, it’s not a bad idea to let them go sometimes. (That way you avoid making too many changes)
    @Little house- ACtually, you sound like you are right on target. If you don’t monitor your balances enough you can end up with some bad fees, and as I mentioned to Young and thrifty, if your portfolio is set up properly, you shouldn’t have to monitor them too often 🙂
    @Beating-Centralizing your accounts is very EFFICIENT. Sounds like you are on top of things.
    Thanks to all for sharing your strategies!

    Barb

    November 19, 2010

  7. Bill Pay and E-Bills are a Godsend. I spend way less time with envlopes, checks and stamps now. It’s the only way to go.

    I also recommend automtic investing. If you have a steady paycheck that is direct deposited, you can easily setup automatic investments into a brokerage account or a mutual fund.

    Bret @ Hope to Prosper

    November 20, 2010

  8. Brett, Great endorsement for excellent strategies to keep financial matters simple leaving more time for “LIFE.”
    Also eliminates missed payments and forces “wealth building” through automatic investing. YOu will be amazed at how the invested money grows over time.

    Barb

    November 20, 2010

  9. Good summary and techniques for getting organized. Thanks! In addition, it can be a good idea to re-balance investments once a year to keep the proper asset allocation. If stock portion has grown too large, sell some and invest in bonds or other categories.

    Robin

    December 1, 2010

  10. Hi Robin, Rebalancing your investments is definitely a part of keeping finances organized. I like that you mentioned doing that task once per year. Althoug others discuss rebalancing more often, there really is no need.
    Thank you for bringing up this important task.

    Barb

    December 2, 2010

  11. I added this write-up to my social bookmarks

    Taliaferro

    July 4, 2012

  12. An outstanding share! I’ve just forwarded this onto a co-worker who was conducting a little research on this. And he in fact bought me breakfast simply because I found it for him… lol. So allow me to reword this…. Thank YOU for the meal!! But yeah, thanx for spending some time to discuss this topic here on your internet site.

    james

    March 29, 2017

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