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Sorting, updating, and organizing your important documents and financial information is an important first step to building a strong financial foundation. But you may be like me and think organizing paperwork is the worst way to spend the day, akin to cleaning out the basement!  It might feel good to get it done but it’s too easy to come up with “more important things” that need attention.

Yet knowing that you can readily locate tax information, have estate documents in order and in a safe place, and know the balances in your bank and investment accounts provides a high level of comfort and security. If there are any issues, information can be tracked down easily and problems can be resolved relatively quickly.

If you still need convincing, here are 3 reasons to get financially organized.

Reduces Stress and Saves Time

It has been proven that too much stress causes physical and emotional illness, including high blood pressure, anxiety, chest pain and susceptibility to colds and other viruses.  If you find yourself spending hours looking for financial documents (especially during tax time) only to come up empty handed, you know that replacing the necessary document(s) often requires numerous phone calls or in-person appointments to various agencies. More importantly, it is additional time spent doing exactly what you didn’t want to do in the first place!

Saves Money

Keeping track of financial statements is crucial to make sure you’re not inadvertently overpaying or being overcharged. Personal financial professionals like daily money managers find numerous errors on bank statements and request refunds or investigations into these discrepancies on behalf of their clients. Errors are often corrected and the money returned within a few days. But this only works if you keep track of all the financial details.

Sometimes it’s as simple as checking to see if the amounts being charged are correct, or maybe, as in the case of cable or cell phone costs, the charges can be lowered by just speaking with an agent.

Provides Peace of Mind

For many people, the knowledge that their affairs are in order allows them to enjoy life to the fullest, without worrying that their adult children, family members, or others will have to spend countless hours looking for the necessary documents to finalize an estate or make important medical and/or financial decisions.

Being financially organized won’t guarantee happiness, of course, but it certainly plays an important role in finding peace of mind.

Where To Start

Deciding to tackle an organization project like this can feel daunting and overwhelming. The trick is to simply start.

The American Association of Daily Money Managers (AADMM) has developed a list of financial organization tips for peace of mind. Here are a few of those tips, which will give you some momentum in organizing important documents and information:

  • Sort the mail immediately – As soon as mail arrives, separate it into junk (to be tossed), bills (to be paid), and documents (to file).
  • Create a budget and a checklist of bills – Due dates are usually the same every month, so keep track on a calendar, and review your income and expenses on a weekly basis. There are also useful (and free!) phone apps to help with budgets and bills.
  • List of all your financial accounts – Make a list of the details of your checking, savings, investments, credit cards, and/or loan accounts, including account numbers and how to access these accounts in the event of an emergency.
  • Store your passwords – Find a secure location and make a list of all your important logins and passwords. There are secure password management tools that specialize in keeping this information safe and all in one place online.
  • Make note of and safely store important documents – Wills, passports, power of attorney, insurance policies, tax records, and the like should all be in an easily accessible place.
  • Make a list of important contacts – for example, next of kin, accountants, attorneys, and doctors should all be listed with full contact information provided.

Finally, and perhaps most importantly, tell your relatives where they can find this information in case of an emergency!

You Can Do This

Taking the time to organize your financial records and important documents is well worth the effort. It not only saves you time, it could also save you money. It’s an important gift you can give to your family so they don’t have to worry about how to find information or be forced to make potentially difficult decisions in an emotional situation without the benefit of the information they need.

Barbara Boustead, LCSW DMM of Mary’s Daughter LLC provides daily money management services from Madison, WI. Barbara is an AADMM board member. Connect with Barbara on LinkedIn.

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