Financial Organization “how to” for the best year ever

One year ends, another begins…you’re annoyed (but ignoring) all the year-end statements cluttering your kitchen counter This is the perfect time to get started with your financial organization. But perhaps procrastination is holding you back, or maybe you just don’t know where to start? It’s not always easy. 

Getting financially organized sounds so simple….take a couple hours to tackle the pile of bank statements, with a few file folders, labels, shredder, and voila! But life just kept getting in your way last year and you didn’t get it done, right? Totally understandable. Staying financially fit is actually an ongoing goal for most of us – you can never really set-it-and-forget-it, much like your staying physically fit. But keep plugging away at streamlining those financial “to dos” when you get the chance, and you’ll find yourself more financially fit every year.

Financial goals top New Year’s resolution list

Good financial organization encompasses more than:

• merely paying your bills
• knowing how much is in your bank account and
• getting a plan from a financial advisor

Being financially organized includes the routine tasks and updates in the list below, some that you need to do annually and others that can be “once-and-done.” Yes, everyone’s financial “to dos” are a bit customized, but your overall approach can follow a similar routine to form good habits and be financially fit.

Practice good financial organization and build a financial fitness habit – a good checklist to start.

Try looking at your financial life much as you would your physical fitness, a menu plan and adapting your diet when your goal is a healthy lifestyle. You would probably keep annual dental visits, watch your calorie intake, and get an exercise routine, right? Plus you might use grocery lists for menu planning and try healthier recipes, perhaps repeating the dishes you enjoy and eliminating those you don’t?

You can ace your financial fitness checkup with a similar routine. Just assess-adapt-automate…and repeat.

Assess – Adapt – Auto-pilot…Repeat for organized personal or family finances

If you don’t have a financial checklist, now is a great time to create one. Specifically, that’s a list of itemized tasks you need to accomplish for the year, things you might need to change from year to year, and tasks you can simplify.

Here are 7 tasks to assess and include on your annual financial checklist:

1. Collect and separate your 2018 receipts. Keep those needed to prove tax deductions. Don’t know what to keep or for how long? Use our printable checklist.
2. Collect the year’s pay stubs, banking statements, and broker statements. Our printable checklist shows how long to keep these docs too.
3. Shred mail containing your private information before discarding. You may do this more frequently. But if you keep a “to-shred” stack, it’s likely piling up and time to handle it.
4. Update HSA and FSA amounts. If you have a Health Savings Account (HSA) or a Flex Spending Account (FSA), be sure to earmark amounts to fund them for the coming year. Look at the FSA dollars you used last year to estimate for this year.
5. Make a budget. With all those receipts handy, it’s easier to figure out what you typically spend and budget an amount for this year. Here’s our printable budget to estimate monthly income and expenses.
6. Look at your 3 credit reports and freeze your files. You know data breaches are becoming common and your financial information is more at risk than ever. You can make it harder for identity thieves if you freeze your credit files – and those for your kids too. Find contact info here. Fyi…if you plan to borrow money (car, house, tuition), look at your credit report from each credit bureau before you freeze your accounts.
7. Make a net worth statement. Know roughly how much are you worth? This doc is a list of all assets (including banking and investment accounts) and all debts (including credit card balances and loans). You can add specifics to your financial situation. For example, you may be: contributing to one or several college 529 plans, withdrawing funds in those accounts for tuition, or opening more accounts (new baby). You might be funding or adding different types of accounts (like IRAs or Roth IRAs). Or, you might be taking a new student loan (or consolidating) or starting required distributions (from a 401k or IRA).
   Include these tasks on your checklist and update the accounts on your net worth statement. After you create this document, just update or adapt it every year or when you have a major event. We’re focused on financial organization here, but we’ll discuss how to build up net worth in a later post. ; )

Plan to adapt. So, update these 6 tasks too:

1. Make a copy of your credit cards, passport, licenses. In this age of identity theft, your card numbers may have changed during the year. So making an annual list saves time if a card is lost or stolen. Again, make your original list and then adapt or update every year.
2. Change your online passwords. When you get complacent, accidents happen. We all should really change passwords more often, like monthly or quarterly. So….if you haven’t done it recently, change passwords now, especially for financial accounts! Too many to remember? Consider a password manager app.
3. Review your deductibles on insurance policies. Things change – cars depreciate, homes get improvements, kids get older, new purchases are made. So how you protect your assets should adapt too. Look over your insurance policies to see if you need to raise your deductibles (amount you cover in case of a claim) or increase coverage (what’s protected if you make a claim).
4. Review contents of your safe deposit box, or rent one now at your bank or credit union. This is a safe place to store critical papers, like wills, birth certificates, passports, real estate deeds/titles, and perhaps older stock certificates or savings bonds.
5. Check financial accounts to update your beneficiaries. More often than you think, beneficiaries have changed names or are replaced. Make sure your accounts reflect new events in your life (marriages, divorces, kids turning 21).
6. Update your paycheck withholding and/or estimated tax payments to avoid income tax penalties. Contact your employer to do this.

Financial organization tasks to try on auto-pilot

Your next step is to automate – make it easier to stay on top of your finances as they become more complex. What tasks, if any, can you put on auto-pilot to simplify this year?

• Auto-bill pay is especially helpful for constant amounts – monthly subscriptions, mortgages, utilities, loan repayments. You can typically set up payments either through your bank/credit union or through the supplier of the service.
• Auto-deposit your paychecks, if you don’t already do so. Check with your employer to start.
• Auto deductions from your paycheck can be made to your company’s 401k plan – and you’ll save painlessly for retirement.
• Split deposit auto-save, or direct a specified amount from each paycheck to your savings account rather than direct deposit your entire paycheck to a checking account.
• Calendar reminders for payments to credit cards, tuition, student loans, estimated taxes, and to remind you to change passwords, fund accounts, spend FSA funds or do a mid-year or quarterly financial check.

Next up for getting financially organized…what to save and what to shred. Do you know how long to keep your financial documents? Read on, money smart ladies!