Just like a cluttered house, unorganized finances can give you a huge headache. It will be hard for you to track your money and what’s going with it. If you need financial documents to support your application for a house or car loan, it may take you a day to find what you are looking for. Or worse, you can’t find it at all. This is just one scenario of the turmoils that you may experience if you do not know how to organize your finances.
To avoid problems, here are some excellent finances organization tips that you should incorporate beginning today:
Record the Numbers
You know how much you are earning monthly. So the next step that you need to take is to track where your money is going. Make a list of all your bills and other expenses including food, car insurance, health insurance, and daily allowance. You also have to note the amount of money that you are putting towards your savings. If you religiously do this, you can readily see if you are short of if there’s room for investment.
Ditch the Boxes
We are now living in a modern world and it is time to get rid of the old-school ways of keeping your receipts and other financial documents. In those shoe boxes!
It is great that you are keeping the docs in one place, but going through a pile of paper can be a headache too. So instead of tossing everything in a box, use folders and envelopes. Separate the old slips from the current bills.
Purge Old Records
If you want to de-clutter, you have to purge old records. But be careful when sorting out the documents because you might need some of them, especially those that prove your monthly income. Those are essential if you want to take a loan out.
So what are the things that you can shred? ATM receipts. As long as they match your bank statement, let them go. The same is true with payslips that are 5 to 10 years old.
Keep Important Documents
Like what we have mentioned above, you have to carefully go through your financial documents and keep the important ones safe. For instance, your annual W-2 and credit card statements. Arrange them from the most current to the oldest ones.
To further reduce the clutter, you might as well go digital. Your bank statements, as well as credit card bills, can be sent directly to your email. Or, you can simply log in to a portal to view your bills. This will help you big time. You won’t have to worry about tons of documents in your house anymore.
Additionally, instead of using notebooks or pieces of paper when creating a budget and tracking your spending, utilize an excel sheet.
Review Your Financial Documents
Reviewing your finances on a regular basis is highly recommended. When you get your credit card bill, for instance, make sure that you cross-check all the items. If you find something irregular, then clarify it with the provider.
It is also a great idea to look into your numbers and see if there are any adjustments that you can make, especially your expenses, so you can stretch your monthly earnings.
Come Up With a Bill-Paying System
Paying your bills on time is crucial so you won’t have to pay penalties and other additional charges. So regardless if you are paying online or offline, come up with a structured schedule.