Organizing your finances

Financial management and tax planning are year-round events. They start with a monthly date between you and your records.

With tax day almost here, it's a great time to make a new (tax) year's resolution to get your personal finances in order.

If you're like most people, your personal financial records are most probably kept in less than 'Good Accounting Practices' standards. For example, stashing old ATM receipts and hanging on to a stub showing what you paid for a pack of mints two years ago (cash, of course), might be filed with your paycheck stubs, credit card statements-- paid and unpaid alike--as well as a few tax forms, a stray paper clip and a penny.

Anything from an old shoe box to a toolbox would do for this method of personal financial tracking, but you can do better than that. Not to worry. Here's how:

  1. Plan for a few hours of 'alone time' with your financial records. This is a dandy time to pack the kids off to the mall or a friend's house. Start up a pot of excellent coffee and put aside a little snack (preferably chocolate) as a treat when you're done.
  2. Supply yourself with ample space, such as a large dining room table. Make sure you have enough organizing supplies close at hand like sticky notes, manila file folders, a tub to hold them with hanging file folders, large envelopes, a check file, ring binders and a three-hole punch if you like, an open stacking file and an organizer/sorter. A trash can by your side is a must.
  3. Get everything from everyplace--shoe boxes, check files, file folders, etc.
  4. While enjoying your cup of coffee, make a game plan. Decide what you're going to put where (e.g., checks and statements go in a specific file for checks and statements, credit card statements can be unfolded and placed in a file folder, etc.)
  5. Start sorting on the table. Checks go here, ATM receipts go there, paycheck stubs go over there, paid bills go on the other side, etc. until all the 'stuff' is divided into neatly organized piles. Use sticky notes to mark what-goes- where on the table to avoid confusion.
  6. Put all the 'paid' items away first. Be ruthless. It's perfectly okay to toss the receipt for those mints from two years ago.
  7. Put the rest of the inactive items in the envelopes, file folders, check files or other storage devices that are interesting, functional and readily available from your local office supply store.
  8. Have another cup of coffee and tackle the active, or open, items. Decide what you're going to pay and when. If you have an open stacking file, you will find one with four compartments (one for each week of the month), very handy for this purpose.
  9. Balance your checkbook. Now.
  10. Enjoy your chocolate after putting everything away where it belongs and, oh, by the way, check the calendar for when you'll be doing this again next month. Mark that date.

Of course, next month this will all be done much faster.

I highly recommend using technology to make this much easier and faster. Programs like Quicken and Microsoft Money can help, but really any spreadsheet program will do.

Have a category for each life area you spend money. Once a week or month take your receipts, checkbook records and scribbled notes and record where you spent ALL your money...every penny. One of my students was shocked to find out he was spending $75 per month on orange juice! If this is you, don't worry. Legend has it that the Rockefeller boys did this and they turned out all right.

This time next year you'll be happy you started today.