4 Steps to Organizing Your Financial Clutter

 

Financial clutter may happen once a person spends a significant amount of money on things they do not necessarily need. The need to organize your budget occurs when you have a pile of unopened statements and bills. This process does not have to be daunting; by following the steps provided below, you will realize that this is relatively simple.

 

Step-By-Step Guide when Organizing Your Financial Clutter

 

In this article, we will help you sort out your financial clutter. Hopefully, we can guide you towards having total control of your finances.

 

1. Gather and Organize Your Financial Files

 

Look at every corner of your house and gather all the financial files that have been bothering you and place it all on your desk. Start opening the unopened statements. If you stumbled upon a statement that needs to be addressed urgently, put it on the pile that is 'time-sensitive.' You will have to address this in a matter of 2 days. You should organize your financial clutter into four piles:

 

·         Time Sensitive- Current and overdue bills that need to be addressed immediately.

 

·         Monthly Statement- This may include pay stubs, retirement, and bank statements.

 

·         Past Bills- Includes mortgage, phone, utilities, and credit card.

 

·         Permanent Document- Insurance policy, birth certificate, marriage license, and wills should be added here.

 

For those receiving electronic billing statements, the best way to organize your financial files is by separating the files into different folders. You may also use the category mentioned above when naming the folders.

 

2. Dispose of Obsolete Items

 

After organizing your financial files, it is time for you to shred the old documents. Removing a significant amount of documents will feel liberating. Do not simply delete it; start shredding your outdated electronic billing statement. Here is a short guide to understanding what you need to keep.

 

·         The insurance policies and paid medical bills need to be kept for at least three years.

 

·         ITR (Income Tax Return) needs to be stored for three years.

 

·         Hold on to your investment statement for a year.

 

·         Bank statements and credit card statements used for tax purposes need to be kept for three years.

 

 

3. Storing Your Financial Files

 

Finding a location for your financial statement is like organizing your home. The items you need to use frequently will have to be stored in places you can easily access. The time-sensitive finances should be placed on your desk. Organizing the financial files on your computer would make it easier for you to be on top of your financial obligations.

 

4. Keep the Phase

 

Now that you completed the organization of your financial clutter make it a habit to allot a time of your day to maintain your financial state free from any confusion. You may think that this process is time-consuming but consider how many times you spend on the things that are not as important for your future and financial standing.

 

Finally, make sure to consider using the software and programs that will help you organize your financial files. Budgeting, bill-paying, and online banking software will help you address your organization's task with just a click of the right button. Learning to organize your financial clutter will allow you to better control your future and assets. Start addressing your finances by following the steps we provided above.