Chapter 2: Get Organized

Organization is key to efficient money management. Once all of your information and paperwork is in order and accessible, you’ll never have to waste time searching for important documents, wonder about account balances, or miss bill payment deadlines.

Designate a personal money space
Set up a safe and private area in your home where you can conduct all of your personal financial business. This is where you will be keeping such documents as incoming bills, shopping receipts, and tax records. If you have a computer, a logical workspace will be close by, particularly if you will be using software designed to help you with money management.

Have the right home office tools
You can organize your personal finances with just a few home office tools:

• File cabinet – File receipts, rebate information, warranties, paid bills, and recent account statements so you can quickly access them. Review the contents of your cabinet regularly. Keep checking, savings, credit card and brokerage account statements for seven years. Discard old documents and store the ones you need.
  
  
• Shredder – To guard against identity theft, invest in a shredder (preferably one with a “cross cut” feature, where instead of slicing the paper into strips, it cuts at various angles). Use it to destroy all unnecessary personal and financial documents before you discard them. Shred paperwork that lists your account numbers, passwords and PINs, personal contact and identity information (especially your Social Security Number). Specific items to shred and discard include:
  • ATM receipts
  • All account statements
  • Canceled and voided checks,
  • Credit reports
  • Employment pay stubs and records
  • Expired passports and visas
  • Pre-approved credit card applications
    
    
• Fireproof safe – In a home safe or firebox, keep:
  • Enough cash for a few days worth of food and shelter (in case of emergency)
  • Insurance policy documents
  • Copies of deeds and titles for your home, car, and other real property
  • Copies of previous year's income tax returns
  • Originals of wills and powers of attorney
  • Backups of computerized financial records
  • The key to your safe deposit box

Streamline your personal finances
The more incoming paperwork you have, the harder it is to keep straight. Therefore, a great way to simplify your system is to sign up for online, automatic bill pay (available for free at most financial institutions). With it you’ll be able to view statements and pay bills via the Internet. It cuts down on mailed bills that can get lost under a shuffle of paperwork, and can prevent late payments, help you avoid penalty fees, and keep your credit history positive.

Monitor your checking account
If you have a checking account, monitor your account activity carefully. You should always know your correct account balance, if checks are outstanding, and when any automatic payments are due to be withdrawn. This way you will never overdraw your account and be charged insufficient funds fees.

In your checkbook register, list every transaction you make, including deposits, checks, ATM withdrawals, and debit card purchases. Regularly compare the information you have recorded in your checkbook register with the information on your account statement. Reconcile any differences immediately and contact your financial institution if you notice errors.