Are you organized when it comes to your finances, or do you scramble to find what you need? And does it really make a difference whether you are financially organized or not?
In, You Don’t Have to be Rich, Jean Chatzky says there is a correlation between how financially organized you are and how financially well off you are – apparently, the more organized you are, the better off you are. In her research she found that:
- 72% of the organized are financially well off, compared to 23% of the unorganized
- 56% of the organized worry about their finances (86% of the unorganized)
- 24% of the organized are knowledgeable investors (7% of the unorganized)
- 61% of the organized are good money managers (28% of the unorganized)
- 73% of the organized are in control of their finances (42% of the unorganized)
So why the correlation? Here’s my take:
- The more organized you are, the more engaged you are. The more often you work on your finances, you the more you think about your money and ways to make it grow.
- If you are more organized and engaged, you’ll be less stressed. If you are cluttered, you can’t find the bills you need to pay, can’t remember what did or didn’t already take care of, and you run the risk of missing deadlines. All of these things can add more stress in your life – not to mention late fees.
- The more frequently you pay your bills or track your purchases, the better you stay on top of your money and within your budget.
- If you get and stay organized, you are more likely to think ahead and plan for the future.
How to Get Organized Financially
You Don’t Have to be Rich lists four tips for getting organized financially:
- Toss – Go through all your clutter and find anything that has to do with your finances. Toss out the stuff you don’t need. Be ruthless.
- Organize – Create a simple filing system for your finances. At minimum, you need an “in-box” or “to be paid” file, where you put every bill or financial statement until you’re ready to deal with iy. Then go through all your financial papers and sort them into a few categories that make sense to you.
- File – Once you have decided on your categories, create a file folder for each one. Then whenever each bill is paid, or each statement is dealt with, you can file it in the proper folder.
- 15 Minutes a Day – You can really stay on top of your finances if you take just 15 minutes a day to go through your mail, toss the junk, open what’s necessary, and deal with it right then. You might do it as soon as you get your mail after you get home from work. Or maybe after dinner. Or right before you go to bed. I think the biggest reason people get disorganized is because they don’t take the time to deal with things right away – they let it pile up.
What kinds of financial papers do you need to keep? And for how long? We’ll cover that in our next post.
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