Estimated reading time: 9 minutes
So you’ve decided it’s time to get financially organized. Maybe it’s the start of a new year, a new quarter, your birthday…or a random Tuesday. One thing is for sure—you’re sick and tired of feeling overwhelmed by your money.
You sit down to assess where you are, feeling ready to take on the world. Then you start to look at ALL the paperwork surrounding you, and you feel stressed. Then you begin to sort through the paperwork and stress turns into panic and overwhelm.
We’ve all been there. No one can deny that financial organization is daunting, even for those who feel they’ve got a grip in this area already. For those of us who know they don’t have a hold (and if we’re completely honest with ourselves, really don’t have a clue), the thought of tackling it all is terrifying.
Well, the best steps to any financial goal, big or small, are to start assessing your to-do list and creating tasks to check off when each phase is complete. In short—the best idea is to take it in steps. I want you to remember the quote by Creighton Abrams: “When eating an elephant, take one bite at a time.” It’s that simple because the hard part is starting.
Now you’ve decided it’s time to begin, let’s break down the process into six simple steps to get financially organized once and for all!
Table of Contents
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6 Simple Steps to Get Financially Organized
Step 1: Address the Important Documents
One quick note before you begin, I highly recommend creating a budget snapshot. A budget snapshot is a simple overview of money in versus money out, but it will help to inform your process. In my FREE resource library, you’ll find an accompanying Monthly Budget Workbook to help you begin. The workbook will tell you exactly where your money goes.
Once you’re ready to start getting financially organized, your first step is to address your essential documents. Your task is to establish a binder, accordion file, or another filing system to hold all your bills and paper statements. This system is where you’ll keep your legal documents, tax information, and other permanent records.
If your documents are decades old, these papers may be the only authentic record that exists! Since certain documents need to be kept in a hard-copy format, safe storage is kind of a big deal. Can you imagine if you lost the only true record you couldn’t duplicate or, worse yet, replace?
You may want to consider putting your most important documents in a fire-safe box (or fireproof safe) in your home or at another secured location. If your home isn’t an option, consider either a trusted relative’s home or in a safety deposit box at a financial institution.
Organize your other important-but-less-critical documents—like bills and paper statements—in your binder, accordion file, or preferred filing system.
Step 2: Automate Payments In and Out
This is a simple step, but it’s critical. When there’s money floating around and checks to deposit, it’s easy to lose track. It’s rare these days for most of us to go to a bank, and if you’re holding on to money, the temptation is to cash it out and spend it.
Automate whenever possible (including bill-payments). Automation will make your life so much easier and less stressful. Bills will get paid on time and you won’t need to spend hours organizing and sorting through papers.
Sign up for direct-deposit from every source you receive money. This may include your employer, any side-hustles, Social Security benefits, and tax refunds. If you’re running a side business, ask clients to pay you through direct deposit, wire transfer (EFT), or an electronic source (PayPal, Venmo, etc.) you can transfer right into your bank account.
Direct deposit not only saves you time but gets you paid faster, and it’s more secure. You’ll avoid fees, hassle, and stress if you take as much automation help as you can get!
Step 3: Go Paperless
Your “to-do” in this step is to go paperless. Consider registering for online accounts whenever possible to reduce paper and clutter.
Now, let me tell you, I was once a paper-all-the-way girl. I was firmly against the idea of paperless for a long time. I used to save EVERY. LAST. RECEIPT. Yes, I know, say it with me: “control freak.”
My obsession with paper is a crazy admission, and it sounds wild to me now, knowing I used to do it. Yet, after every tax season, there I was, shredding the absolute most useless receipts from my older files. WHY?!
The good news is that eventually, I saw the light, and it didn’t take me too long to get over ALL THE PAPER. When going paperless is the new norm for you, you will honestly wonder why you didn’t start years earlier. I know I did!
In case you were wondering, the only paper I hold onto now is the last 7-years of my current files (important paperwork only), and the last 10-years of my most recent tax returns.
If you still need a little nudge, like in Step 2, automate whenever possible by going paperless. It’s so much less paper and clutter and it’s almost a guarantee that your paperwork won’t end up in the wrong hands. Plus, there are fewer pieces to agonize over when you decide to get financially organized.
Step 4: Catalog Your Permanent Records and Information
In this step, you’re going to catalog your accounts and key documents to help you keep track of your legal documents, tax information, and any other permanent records.
It’s essential to store these documents in a secure location, as I mentioned in step 1. You will also need to keep track of what you’ve stored, whether these documents are in your home, a trusted relative’s home, or at a financial institution. You must know exactly what those documents are.
Since this information is only for your private use, not for public consumption, consider including a list of your account numbers, detailed descriptions, passwords, and PINs. In doing so, in the event you want to make any changes in the future, it will only ease the process for you.
Store this catalog somewhere very safe and hidden. Should you (or your loved ones) need this information, it’s available; otherwise, keep it secure.
Step 5: Establish Estate Plans
If your estate planning needs have already been created and established, great! You’re ahead of the curve. You’ll just want to make sure to keep those documents up-to-date. If you haven’t quite gotten this far yet, you may want to meet with an attorney to establish either a will or trust.
I can’t speak highly enough of how important estate planning, wills, and trusts are. At the very least, everyone should set up a will. You may believe you don’t own enough “stuff” to justify a will, but it doesn’t matter how little you think you own. By making a call, a reputable attorney will advise you on your particular situation.
Now for my disclaimer: I’m not an attorney, I don’t pretend to be one, and everything I say (and write) is strictly my own opinion.
But here’s the deal, if you pass away prematurely (and really, when isn’t death premature?!) without a will, you will leave your beneficiaries in a world of hurt. Not only will they have the difficult task of facing your death, but they will face the added stress of ambiguity about your final wishes. Because you didn’t take the time for a phone call to establish your legal wishes, the situation will be nothing less than devastating.
Again, in the event you already have a will or trust, you deserve praise! However, keep in mind that estate planning isn’t a one-and-done deal. You will need to update your documents if either your wishes or the laws change.
Additional items to check-off your estate planning list are getting your individual life insurance policies, retirement accounts, and your investments updated as well. The best time to review and complete this task is during your employer’s annual-enrollment. This happens every year, usually in the last quarter, in preparation for the upcoming New Year.
Since you’re reviewing your beneficiary designations relating to your company’s group life insurance coverage, and your employer-sponsored retirement plans, why not take care of your personal accounts during this time as well? If you’re not too sure when your employer’s annual enrollment takes place, contact your Plan Administrator.
Step 6: Plan for the Future
No matter your age, you should ensure you get financially organized and prepared for any future. Many of us don’t like to think of these aspects of planning, but it’s critical to your well-being and the well-being of loved ones. If you haven’t done so, designating a power of attorney, establishing a living will and a health care directive.
This is an area of end-of-life planning where you don’t want to leave your beneficiaries in the dark. Leave clear instructions and write down the contact information of your attorney, your accountant, and trusted advisor. Give this information to your beneficiaries. Do this by a hand-written note, email, or homing pigeon—just make sure they get it.
Also, provide your most trusted loved ones or trusted advisor with the combination to your fire-safe box (or fireproof safe), or access to your safety deposit box. Let them know where your financial documents are stored and what they would need to access in case the worst should happen. Not only will this give you peace of mind, but it will extend the same peace of mind to your loved ones.
If you’ve decided it’s time to get financially organized, taking these six simple steps will help you get on top of your entire financial picture. Remember, you don’t need to do it all at once, but by knocking out these six items, you will have taken a significant bite of the elephant.
To help you stay on top of the process, I’ve created a “6 Simple Steps to Get Financially Organized” checklist. This list is available in my FREE Resource Library, along with more excellent tips on investing, life insurance, personal finance, and preparing for retirement.
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