The best way to organize your finances is with a budget that accounts for all of your income and expenses, a clear financial plan that sets you on the path to achieving long-term goals, and a commonsense record-keeping system. You also need a clear process for monitoring and updating everything, to keep your finances organized.
It’s good to tailor things to your own preferences and habits as well. Similarly, if you have a partner, you should set aside some time to go over finances to make sure everyone is on the same page. Read below for more details on how you can organize your finances.
1. Make a List of All Your Financial Accounts
Gather information, such as the type of account and what institution it’s with, about every financial account you own, so you have a record of everything all in one place. This will make day-to-day money management easier, and it will also assist your loved ones if they need to fill in for you for some reason.
Keeping your information in one place also allows you to more efficiently analyze your finances. It’s important to include both your assets and debts in the list, so you can get an accurate view.
Some examples of accounts to include in your list are:
- Bank accounts
- Savings accounts
- Certificates of deposits
- Brokage accounts
- Credit Cards
- Loans
- 401(k)s
- IRAs
- Life insurance policies
You can use a spreadsheet to keep tabs on these accounts, or you can use a financial app, like the WalletHub app.
2. Create a Budget
Making a budget allows you to organize your expenses, so you can make sure you are not spending more than you earn. Budgeting can also allow you to be more mindful of where your money is going so you don’t waste money on unnecessary purchases. It may be helpful to use budgeting strategies, such as the 50/30/20 rule or zero-based budgeting, to better organize your spending.
3. Track Your Spending
Knowing where your money is going will give you a better handle on your finances overall. Tracking your expenses using tools like spreadsheets or budget apps will really make it clear to you exactly how much you are spending.
Budget apps, like the WalletHub app, can make tracking easy. These apps let you sync your financial accounts for automatic tracking, so you don’t have to spend time tracking your transactions manually. These tools can also help you analyze your expenses to see what categories you may be overspending in.
4. Make a Financial Plan
A financial plan can help keep your finances organized. Financial planning involves laying out your current financial situation – such as your income, assets, and debt obligations – along with your financial goals, then developing strategies you can implement to achieve those goals. It factors in all areas of your finances, such as investments, retirement, and estate planning, so you can organize the various aspects of your financial life with this plan.
5. Automate Your Savings
One way to organize your finances is to automate certain activities so there is less you will have to remember to do. Saving is one of those activities that you can automate. You can put your savings on autopilot by scheduling regular transfers from your checking account to your savings every time you get paid. This is referred to as the pay-yourself-first method, and it can help you build an emergency fund for unexpected expenses or save for large purchases in the future, such as a house or a vacation abroad.
You can also automate saving for retirement, by scheduling transfers to your retirement account every month or having your employer automatically deposit a certain percentage of your paycheck to your 401k plan. The automation process can help you save, but it can’t ensure that your savings rate is keeping up with your income. You want to make sure to check your savings plan from time to time and increase how much you transfer into your savings whenever you get a bonus or a pay raise.
6. Manage Your Bills
Missed due dates can wreck your finances with costly late fees and potential credit damage, so it’s important to stay on top of your bills to avoid suffering these negative consequences. You can set up automatic payments for your bills, so you don’t forget to pay them. You can also use a budget calendar to keep track of when bills are due to make sure you have enough money in your account to cover the bill and prevent overdraft fees.
7. Have Family Budget Meetings
Schedule meetings weekly or monthly to go over finances with your everyone in your household. Having open lines of communications about money matters can help prevent misunderstandings and can encourage everyone to work together to achieve family goals. During these meetings, you can discuss topics like the family budget, investments, savings, and the location of important documents. It’s a good way to keep everyone on the same page and your finances organized.
8. Have a Commonsense Record-Keeping System
Make sure your record-keeping system for your financial accounts is accessible and simple enough to understand for multiple users. This reduces wasted time and helps prevent confusion for your family members if they have to find financial information when you are not around or unable to do it yourself.
9. Monitor and Update Your Financial Accounts
It’s good to have a clear process for monitoring and updating your financial accounts. For example, you can set aside time every month to review and update your budget. You can also check whether your personal information, such as your mailing address and your contact information, is correct on things like your bank accounts, credit cards, and retirement accounts. You don’t have to check the information every time you log into your accounts, but you should aim to check whether your personal details are correct a few times a year.
It's also important to monitor your credit for any suspicious activity. You can do it yourself by reviewing your credit report regularly, or you can sign up for a service that offers credit monitoring for free – like WalletHub does – and have your credit monitored 24/7.
10. Store Your Documents in a Safe Place
Whether you have hard copies or digital copies of your documents, it’s important to have them stored in a safe place to prevent them from getting lost or damaged. Keep hard copies of important documents in a fireproof and waterproof safe in your home. Alternatively, you can put these documents in a safe deposit box at a bank or credit union. You should also have a second copy of these documents in a separate location to keep as a backup.
Organize digital documents in a folder on your computer. You can create subfolders for each type of document to stay organized. Just make sure you have your computer password protected to prevent someone you don’t authorize from accessing your information. You should also save a second copy on an external hard drive or print out hard copies to put into a safe to have as a backup in case you have a computer failure and lose your files. Avoid emailing important documents to yourself to prevent others from getting access to your personal information.
Learn more money management tips.
Benefits of Organizing Your Finances
- Makes important info easy to find. You and your family members can find financial information and documents quickly when you need them.
- Gives you control of your finances. A Charles Schwab survey found that 75% of people say they feel more in control of their finances with a financial plan.
- Reduces financial stress. According to a Capital One survey, 73% of people said their finances is a major stressor in their life. When your finances are organized, it is less likely to cause stress.
- Declutters financial messes. When your finances are organized, you have space to focus on your goals. For example, if you don’t know where your money is going every month, it’s hard to tell whether you’re really financially stable. Similarly, if you have a lot of debt, it’s unlikely you can optimize your savings since a portion of your income is going to paying down those debt obligations. The sooner you can get rid of your debt, the sooner you can increase your savings to accomplish your goals.
- Prevents your assets from becoming unclaimed property. 1 in 7 people have unclaimed property currently under their name, according to the National Association of Unclaimed Property Administrators. When you lose track of financial accounts due to bad organization, you could be losing out on money.
- Increases the likelihood of achieving financial goals. 96% of people say they feel confident they can reach their goals when their finances are organized in a financial plan, according to a Charles Schwab survey.
Keeping your finances organized can help you improve your overall financial health. On that note, you can check your WalletScore for free here on WalletHub to see how your finances are doing overall. Your WalletScore tells you how financially healthy you are, based on factors like your credit, emergency preparedness, retirement planning, and spending.
WalletHub experts are widely quoted. Contact our media team to schedule an interview.