Quick Personal Finance Tip-How to Keep Your Finances Organized



Welcome to another new feature at Barbara Friedberg Personal Finance, “Quick Personal Finance Tip.” This feature gives you access to quick tips to further your financial goals. Look for these tips periodically. Better yet, pick up my RSS feed and follow me on twitter so you get the word immediately.  

I have been reading the 31 Days to a Better Blog  for about 5 months now (obviously, I’m a bit behind schedule) and one of the assignments is to solve a problem for the reader.  Although, I of hope that my entire site solves your problems, I am taking the direct CHALLENGE with this article.

PROBLEM: How to Efficiently Manage Your Finances

Organization and time management are big issues today. I’m good at financial organization, so I thought I would give you a quick list of how to handle your finances with minimal effort. For most, these routine tasks aren’t fun, so the GOAL is to set up systems to pay the bills and organize the records FAST.

Step 1: Understand Personal Finance Categories

BILLS: Every month you have to pay bills.

CHECKING & SAVINGS: Maintain and track cash to make sure you have enough on-hand for current expenses, emergencies, and short term plans.

INVESTMENTS: Keep track to make sure you are on target with your financial goals.

TAXES: Almost everyone must complete a tax return or two each year. If you have any self employment income, rental properties, etc. keep good records.

Step 2: Complete Financial Record keeping FAST 

BILLS-30-45 minutes per month

  1. When they come in the mail or your email in-box, put them in ONE PLACE. I use a small old file. For email, use a folder labeled bills to pay.
  2. Once or twice a month, schedule on your calendar; pay the bills. My mom pays them as soon as they come in, but that is inefficient! Others recommend calling the company to synchronize all the due dates. Again, too much work. I pay two times per month.
  3. Set up “free bill pay” at  your bank. Log on to the bank site, plug in the bill dates and amounts and pay. Time spent, 10 to 15 minutes. 
  4. Throw the bills in a folder labeled “RECEIPTS” or “PAID BILLS.” If you have some taxable bills, place them in a folder labelled “TAXABLE EXPENSES” OR “SCHEDULE C.” 

INVESTMENTS-1-2 hours per quarter

  1. I know I’m going to get some flack for this; especially from those of you who post Monthly Net Worth updates. But, I recommend updating your investments quarterly. Hopefully you are regularly contributing to your 401K, savings account, and/or investment accounts. These assets are for long term goals, college, retirement, big-ticket items so why obsess over their value every month?
  2. Use a computerized system. I use Quicken, many use Mint.com and other programs. It does not matter which one you choose.
  3. After every quarter, download your investment transactions, and update their values.
  4. Keep a paper copy of every buy and sell transaction. You need this information for tax reporting when you sell.

BANK CHECKING & SAVINGS-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 lesss frequently.  
  2. Quicken reconciles the account on-line in seconds. Do this once per month.

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 an envelope.
  2. If you do your own taxes like I do, pull out the information in March and input (or import from Quicken) into a tax preparation program such as Turbo Tax. Depending on the complexity, of your situation this could take anywhere from a couple of hours to a few days.
  3. If you hire a tax preparer. Take your file to your tax preparer and go over it with her/him. Make sure to check the preparer’s work for accuracy.

  The set up takes some time, but once the on-line bill pay, Quicken program and approprate folders are organized, the maintenance is simple. And one last suggestion, make sure that you simplify your finances and keep your significant other aware of financial matters.

How do you maintain your personal finance record keeping? Am I missing anything?

ACTION STEP:

 Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans. 

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11 Responses to Quick Personal Finance Tip-How to Keep Your Finances Organized
  1. Barb
    November 17, 2010 | 7:43 am

    Start small, just do one step at a time.

  2. youngandthrifty
    November 17, 2010 | 10:02 pm

    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)

  3. Everyday Tips
    November 17, 2010 | 10:38 pm

    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.

  4. Little House
    November 18, 2010 | 9:55 am

    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!

  5. BeatingTheIndex
    November 18, 2010 | 8:17 pm

    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!

  6. Barb
    November 19, 2010 | 6:29 pm

    @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!

  7. Bret @ Hope to Prosper
    November 20, 2010 | 1:34 pm

    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.

  8. Barb
    November 20, 2010 | 2:11 pm

    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.

  9. Robin
    December 1, 2010 | 5:47 pm

    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.

  10. Barb
    December 2, 2010 | 11:00 am

    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.

  11. Taliaferro
    July 4, 2012 | 3:58 pm

    I added this write-up to my social bookmarks

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