Personal Finance

Guide to Organizing Your Finances

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It’s spring cleaning season – so why not give your finances a once-over?

That might sound like an intimidating concept, especially if you haven’t taken a careful look at your financial situation in years, but organizing your money doesn’t have to be painful. We’re here to walk you through each step, so you can rest easy about your financial future.

Why You Should Organize Your Finances

Auditing your finances is the first step to getting your financial life in order. Never stopping to inventory what you have and what you owe is like going on a road trip with an incomplete map. You may eventually get to your destination, but it will take a lot longer to get there. Organizing your finances will make it easier to become debt-free, save for retirement, or pay for your child’s college education.

This process can also help you identify any blind spots or problem areas, like a brokerage account you’d forgotten about or an old bank account that became overdrawn. The sooner you discover and address these problems, the closer you’ll be to achieving your goals.

Examine Your Bank and Credit Card Statements

Tracking your expenses is one of the most important parts of organizing your financial world, especially if you’re not in the habit of examining your bank statements.

Log on to your bank and credit card accounts and examine all the expenses from the past few months. You may find recurring charges you’ve forgotten about, evidence of fraud, or unused subscriptions you never canceled.

If you discover charges you don’t recognize, contact the card company to dispute them. You generally have just 60 days to dispute a charge, so don’t expect to get your money back if that time frame has passed. You may consider canceling the card in question to prevent more fraudulent charges.

Consolidate Bank Accounts

Having too many bank accounts can be confusing, expensive, and ultimately harmful. Many banks charge monthly maintenance fees if you don’t meet the minimum balance or have direct deposit, so a forgotten account can cost you.

Go over your current checking and savings accounts to determine which you should keep and which you should close. You should have one checking account and at least one savings account for your emergency fund and other goals.

Some consumers like having multiple savings accounts for various savings goals, like one for vacations and a different one for home repairs. But if having multiple accounts sounds too stressful, then stick to one checking account and one savings account.

This is also a good time to consider switching banks if you’re being charged excessive fees. Online banks and credit unions often have fewer fees and higher interest rates.

Rollover Old 401(ks)

When you leave a job, it’s easy to pack up the items on your desk. What many people forget is to take their 401(k) with them.

Rolling over old 401(k)s is key to consolidating your finances. When you leave a 401(k) at your old employer, you’re likely to forget about it. That’s why it’s crucial to roll it over as soon as possible. Also, if you wait too long, the account may become difficult to access because you’ll have forgotten your password or other crucial information.

You can rollover your old 401(k) if you have an IRA or a 401(k) at your current employer. Contact your old 401(k) provider and ask how to roll over an account.

Once that process is completed, make sure your money is invested. People often forget to invest the money after it’s been rolled over, so it sits in the cash portion of their retirement account barely accruing interest.

Organize Your Debts

If you have any loans or credit card debt, start organizing them with a spreadsheet or pen and paper. Here’s what to jot down:

  • The total remaining balance
  • The minimum monthly payment
  • The interest rate
  • The remaining term (not applicable to credit cards or lines of credit)
  • Any other relevant details, like if it’s a 0% APR credit card that will soon transition to a higher APR

Not sure if you’ve found all your loans? You can locate them on your official credit report, which you can find at AnnualCreditReport.com. There are three credit bureaus that produce credit reports, and because not all lenders report activity to all three credit bureaus, it’s helpful to view each one.

If you see an account you don’t recognize, it may be a sign of identity theft. You can file a dispute with the credit bureaus to get it removed from your record.

After you’ve organized your loans, you can start to create a debt payoff plan. You can also sync these accounts to your Mint profile, which will send you due date reminders to help you avoid late payments.

Assess Your Insurance Needs

Insurance is one of those financial topics that most people barely think about.

But while it might be a tedious experience, reevaluating your insurance needs is a crucial part of personal finance.

For example, you may need to buy life insurance now that you’re married with kids. You may also want to buy disability coverage or increase the limits on your car insurance. This is also a good time to compare quotes from other companies to ensure you’re getting the best rate.

Find a System You Can Stick to

Once you finish auditing your finances, it’s time to create a system that allows you to keep everything organized. Set up a regular time to go through your bank, credit card, and investment accounts. Pick a day that works every week and make it a habit.

Ask for Help

Auditing your finances can be overwhelming, especially if you’ve put it off for months or years. If you run into a problem, like an old investment you don’t understand, or a credit card that went into default because the bills were delivered to an old address, it’s time to ask for help.

If you have an issue with a loan or credit card, call the lender or credit card provider and ask what your options are. If you have a tax problem, you may need to find a CPA or Enrolled Agent who can assist you. For investing or general finance questions, contact a financial planner.

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