Get Your Financial House in Order
April 27, 2005 - By Thomas B. Horton

When it comes to getting your financial house in order there are a few easy steps you can take that will get you well on your way to becoming truly organized.

1. Learn what to keep and what to toss.
There's a reason many of us put off organizing our financial paperwork and tend to hang on to too many documents: Throwing out a financial statement that we might need for insurance or tax purposes can have serious repercussions. But few of us have the space, let alone the discipline, to squirrel away every last receipt and statement. Toss monthly or quarterly statements after you receive your year-end summaries, for example.

2. Know where to put what you keep.
Once you've determined which financial documents you can toss and which you should be retaining, you'll have to develop a system for storing the items you're keeping. Experts recommend a three-tier scheme: one for documents that relate to the current year, such as banking and investment statements and utility and credit-card bills; one for papers that you need to hang onto but have no immediate need for, like completed tax returns and insurance-related documents; and a safety deposit box for irreplaceable documents, including marriage and birth certificates, divorce decrees, passports, and original insurance policies. 

3. Create a master list.
It never hurts to plan for the unexpected. That's why I'd urge everyone to create a financial directory in case something should happen to you. On it, you should list all of your financial accounts, from banking to insurance policies to investment accounts, along with your passwords and the names and phone numbers of any advisors that you use. Give this document to a close relative or trusted friend, and put a copy in your safety deposit box.

4. Stay on top of incoming mail.
Get in the habit of screening and filing your incoming statements as part of your regular routine. Handle each piece of paper once, if possible. If you don't use an electronic bill-paying system, I'd recommend logging any incoming bills on to a calendar as soon as you receive them. Note the date on which the bill should be mailed, who you owe, and how much. When you sit down to pay your bills for the coming week or month, this approach will help to ensure that nothing falls through the cracks.

5. Take advantage of technology.
Electronic bill-paying systems and automatic debit programs can help simplify your financial life. Not only can they greatly reduce the time you spend on financial paperwork, but they also ensure that your bills get paid on time. When it comes to monitoring your personal financial accounts, I'm a huge fan of Quicken. Although it does require regular input of your transactions, the payoff is one-button reports on your spending, income, and investment patterns. Many banks and investment companies allow for electronic downloads of your account information as well.

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