Simplify and Organize Your Financial Life

Jill Ciccarelli Rapps | Life in Naples Magazine | December 2016

Managing your money can be a headache, especially if you make financial decisions on the fly. A haphazard approach to overseeing your finances can damage your financial wellness, leading to unnecessary costs and wasteful spending.

As we transition into 2017, many of us are pursuing New Year’s resolutions. As you consider ways to improve your quality of life during the new year, we encourage you to follow these five easy steps for simplifying and organizing your financial life.

By doing so, you put yourself in a position where you can proactively control your money – empowering you to achieve financial success.

Set financial goals

Articulating your goals will help you to prioritize your spending. Identify the biggest financial undertaking you face – for instance, paying off your mortgage, purchasing a second home, saving for your dream vacation, putting your grandchildren through college or preparing for retirement – and write them down where you can visit them often.

Draw up a spending budget

Review all of your income and earnings statements, and understand how much revenue you will have for the month. Then, go through your expenditures and prioritize your future spending. Refer to your budget at least once per month to ensure that you adjust for unexpected income or expenses.

Once you develop a clear picture of your cash flow, you can create a budget that accurately reflects your lifestyle and empowers you to realize your goals.

Create a filing system

Maintaining files of your important documents is instrumental to organizing your life. The key to organization is finding a system that works for you. By doing so, you will find it much less cumbersome to keep up on your financial files.

For instance, many people prefer working with physical files and paper documents. If this is your preference, I recommend keeping a large basket on your desk for dropping receipts, statements and tax information. Twice a year, you should dedicate time to sorting through these documents. Often times, you will find that the paperwork you thought was important at the time can actually be shredded. After your biannual sorting session, you should retain all of your crucial information in categorized manila files.

Finally, dedicate a folder to housing your official documents – including your estate planning files, social security card, savings bonds and insurance policies. All of your files should be saved in a secure location, such as a safe at home, deposit box at the bank, or an online vault. These files should be easily accessible for you, your trustee and your family.

Consider using financial software

For those of you who are more technologically inclined, financial software can serve as a valuable resource for managing your money.

Many of these programs feature built-in templates to help you devise your monthly budgets. Some financial software will also provide you with detailed analytics about your spending habits, enhancing your ability to monitor and control expenses. There are even applications that will scan your receipts and important documents, creating digital archives for your financial information. If you choose to work with financial software, make sure to protect your information from unauthorized access by using encrypted software and creating strong passwords.

Your financial advisor can help you input and consolidate all your financial information in the program, further simplifying the process of managing your money.

Set up direct deposits and withdrawals

Arranging automatic deposits and withdrawals saves you time and effort while ensuring that your bills are paid on time. All regular income should be directly deposited into your bank account; most banks will allow you to split your deposits between different accounts, so you may allocate your deposits to various goals you have identified.

You should also set up any regular monthly expenses – rent, car payments and utilities – to be automatically withdrawn. Although you may prefer paper bills, setting up automatic payments will be helpful in the event that someone else needs to pay your bills (for instance, if you were to become incapacitated).

While these tips will guide you towards a simplified and organized financial life, you should also consider meeting with a financial planner. Financial planners may help you achieve your financial goals by designing your monthly budget, consolidating your key documents, and generating creative solutions to maximize your money.