4 Steps to Organize Personal Finances Without Getting Lost

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organize personal financesThe time has finally come; you are ready to tackle your unorganized financial paperwork.  Yet you are not quite sure where to start, the piles seem endless.  How are you supposed to do a budget or pay off debt when you can’t even figure out where your desktop is?

Don’t worry; with a bit of time and patience you can have a fully functioning plan for organizing paperwork and your bills!

Gather All the Your Financial Papers

To begin to get organized you first need to have all of your paperwork in one place.  Walk around the house, grab all those papers from the kitchen, office, laundry room, your car – anywhere you have tossed your paperwork.  You should be gathering everything from bills, receipts, medical statements, and tax information – anything that has to do with the well being of your money and household management.

Sort all the Paperwork

Now begins the fun part!  You will want to create the following categories to sort the paperwork into:

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  • File – this will be the pile of things you need to get into a file system because you have already taken care of everything that needs done with the item.
  • Shred – to make this easy set your shredder right next to you and shred immediately upon determining it should be shred.  Shred anything that has your personal information on it that you no longer need.
  • Pay – if you have found any item that you need paid put it in this pile so you can tackle it right away.
  • Take Action – I always have a take action pile on things that I still need to do something with but it does not have an immediate payment with it.  For example, scheduling air-conditioning check up, forms that you need to fill out for your child, or party invites that you need to respond to.
  • Don’t know – sometimes you just are not sure what you need to do.  Toss things in here that you need to do some more research on to figure out exactly where it belongs.  Please take caution that you are not tossing too many things in this pile, don’t let indecision take over.

Don’t feel like you need to get this done all in one sitting.  If it is a large overwhelming pile then set up 10 to 15 minute time blocks to work through the pile.  As new stuff comes in the house set it on top for immediate processing.  Add this time to your schedule so you do not miss it; consider it an appointment that is required.  Small time blocks can be a great way to get things done without overwhelming yourself.

Set up a System for Organizing Incoming Papers

Once you have your piles sorted it is time to set up a system to handle each pile and to manage future incoming paperwork.  This is the point where one system does not fit all; everyone has a different style of organizing paperwork efficiently.  It is important for you to take the time to set up a plan that works for you.

For example, I am a pile person.  If something is going to get done it needs to be in a pile on my desk, or I will forget.  So I have one place that all the personal paperwork goes.  Once it has been handled then it needs to move to a permanent home whether this is a file cabinet, shredder or box depends on your personality. If I store it out of the way before it is done it will not get done.

Take the time to watch and see how you operate best.  You might have to try a couple different set ups out to see what works best for you, they key is to keep trying and analyzing what works.  Below are some general guidelines for spaces that you need to set up.

  • Collection Place – you will want to have one place for all incoming mail and paperwork to be collected.  This can be a pile on your desk, an inbox or a file folder.  The important part is that everything is being put in one easy to find place.
  • Bill paying supplies – have everything that you need to pay your bills in one place so you are not running around looking for stamps or envelopes.  This will preferably be located where you keep your collection place.  I keep mine in a desk drawer, but you could also use a plastic storage bin or a desk organizer. Side note on this, if you can make it so everything is electronic you don’t need to worry about having stamps, checks and all the bill paying goodies.
  • Filing System – here you will want to use a standard filing system for your most basic items such as statements, confirmations and receipts.  However you may find for items such as taxes and warranty information you need a different system.  I use a traditional file cabinet for most paperwork, however use Evernote to scan or link to larger pieces of information such as warranties. Stay flexible and adapt to what you need and what works for you.

Set-up a Regular Time for Paperwork

The real key in successfully staying organized and on top of your finances is to manage your money on a regular basis.  When you get behind it can just be too overwhelming to even look at, let alone do something beneficial with it.  So set aside some time every week to work on the items in the collection place.  Once you have paid the bill or done the task, immediately file it away.

At the same time that you have a regular time to manage your finances, the more that you automate the easier and quicker that time will be. Slowly start automating all areas of your finances, even if it is just starting out with one thing.  Some ideas on things to automate: bill payment, electronic statements, monthly investments, reconciling transaction with software, budgeting in software – really now a days the options are endless.

By implementing a system and managing it on a regular basis it is easy to have your financial paperwork organized.  Don’t be scared of the pile – tackle the pile!

PS.  I use almost the exact same system for my business finances!

9 comments
Roger @ The Chicago Financial Planner says February 12, 2013

Excellent post, as usual, Andrea. Great job of laying this out in a completely simple, straight-forward fashion.

    ANDREA says February 15, 2013

    Thank you Roger!

Jason Price says February 15, 2013

Andrea, thanks for these tips. I get hung up on the “filing system” part of the system. I have a filing system, but I also have a big stack of papers that never get filed. Ideally, I’d love to scan everything, but that seems to take more time than just filing them. I keep telling myself I need to do just a few papers per day, but haven’t done a good job of that. As you said, I probably just need to set aside a little bit of time one night a week. 🙂

    ANDREA says February 18, 2013

    You are welcome! I used to get stuck on filing too, just not exactly exciting. Once I started doing right after I was done with my paper it made it much easier. To get caught up, I grabbed myself a coffee, some good music and made myself do it! Happy filing!

Chris @ StockMonkeys.com says February 16, 2013

Great in depth article. I’m always surprised when people I know say their disorganized mess IS their organization.

    ANDREA says February 18, 2013

    Me too, unless you can find everything you need within 5 minutes then the disorganized mess is not working! 🙂

Shawn @ PipsToday says February 19, 2013

Excellent post. Good article about Organize Financial Paperwork. Financial Papers are important & organized paperwork is real key of success organization.

Christopher says February 26, 2013

Nice post. As an upcoming college graduate, knowing the inflow of financial paperwork from student loans, new bills, insurance statements, etc. this is a great piece that can keep me organized right from the start!

    ANDREA says February 27, 2013

    Christopher, Thank you! I know that some of our ability to be further ahead was because we started out organized. We did not have to dig through piles of paper, so have fun organizing and it will payoff in the end! 🙂

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