New Year’s Resolution: Organize Your Finances

Written by JACOB W. BARR

When it comes to organization, there are many things we look at. We organize throughout our homes, from rooms to drawers to closets, and don’t forget about organizing that garage and the shed. But one area we may not be as quick to put our organizational skills to work is when organizing finances. However, doing so can have several positives impacts. Not only will this allow for a better understanding of our finances, but it can also allow for less stress and some peace of mind when it comes to managing money and finances. So, what are some ways that can help get those numbers organized?

One of the most important things when organizing your finances is to have a good monthly budget in place and to review it monthly. Even the recurring bills that are in a budget can change from month-to-month (an electric bill is likely to be different in July and December than it is in May and October), so it is important to keep that budget updated and adjust your spending accordingly. But what should you do if you do not have a budget in place currently? While some like to use Excel for establishing a budget, there are also plenty of free online budgeting apps and templates that can be utilized to help understand how and where you are spending your money.

Another good organizational tip is to keep all your bills in one place. While many of us receive our bills online, some invoices still arrive the old-fashioned way – in the mail – and it is important to make sure that those documents, too, are kept in one place. Property tax and homeowners’ insurance bills are typically paid on an annual or quarterly basis, and are generally received by mail. Occasional expenses, like from a medical test, may come in the mail. Keep your paper bills near wherever you normally write checks or pay bills online. A simple file cabinet or a few folders will do the job to keep things organized. Since most people pay their bills online, it is common to shred or throw away paper statements when they arrive, and rely only on the online records. If you prefer to keep paper records for tax purposes or just for security, file them in the filing system mentioned above, or scan them for storage in an online filing system before shredding them.

If you have money available in your bank account and you don’t have other debit card or expense charges coming through that could cause an overdraft, pay your bills as soon as you get them. Pay attention to paper bills that you usually pay electronically. You do not want to pay a bill twice simply because you received a duplicate by mail.

Make a checklist

Neither mail nor email is perfect, so it is wise to create a checklist at the beginning of the month listing every bill you are expecting. You can keep it on your desk, bill-paying area, or as a file on your computer. If you share expenses with a spouse or significant other, you can easily bounce a check or debit card payment if you don’t know how much the other has been spending when it comes to accounts that are used jointly. Good communication, record-keeping, and organization is very important when there are multiple people on an account.

One last tip for organizing your finances is to have two different accounts. One should be for discretionary spending and saving, and the other should be strictly for paying monthly bills. This will allow you to have clear boundaries and avoid spending your bill money on a dinner out or shopping.

While there are many tips for keeping your finances organized, these are a good starting point. There is no onesize-fits-all approach for organization, and neither is there for your finances. Determine what works best for your situation and specific needs; however, it is very important to start somewhere when it comes to keeping your finances organized. Otherwise, you may run into some difficult situations that can be very stressful and unpleasant. And remember, organizing can be fun, so enjoy it.

Jacob W. Barr, AAMS, is a financial advisor at Raymond James Financial Services, 140 Paul Smith Blvd. in Hagerstown.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Jacob Barr and not necessarily those of Raymond James. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Ark Financial Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services