Managing your finances can be stressful. But imagine if you had no idea who you owed, or how much. How much more stress would that create? When counseling, I often come across individuals who were stressed about their finances because they let disorganization get the best of them. They show up with shopping bags full of unopened mail because they are so overwhelmed that they can’t even bear to open the mail anymore.
I too struggled with disorganization. My wife and I had no system in place and had our bills scattered on the kitchen table, on top of the fridge, and even in old shoe boxes in the closet! One day I finally decided it needed to stop. I started trying to organize things, and I realized that we had been late in paying a few things. This freaked me out! How did things get so bad?
Now my situation was not as bad as I had thought, but the sheer disorganization had me scrambling. In that moment, I decided to develop a system for my wife and I to live by that would give us a simple and easy way to stay organized. Below is my organizational system that I live by and share with clients frequently.
Hanging file folders
Plastic file storage box (you can also splurge on the fire/waterproof locking kind)
1. Put file folders into storage box and label the first one “unpaid bills” and the second “paid bills”. You will want to label the others for other important documents like insurance policies, medical records, investments, birth records, etc.
2. When you get a bill, put it into the “unpaid bills” folder.
3. Each week, pull out the “unpaid bills” folder and decide what needs to get paid that week. Document on the bill stub what date you paid it, how much you paid, and check number (or transaction number if paid electronically). Then file the stub in the “paid bills” folder.
4. At the end of the month when you get your bank statements, reconcile your account and use the stubs in the “paid bills” folder to help you balance the account. When finished, staple the bank statement, stubs from the “paid bills” folder, and any other receipts or documents you have saved together and file it away in another folder labeled “reconciled bank statements”.
This system allows you to keep organized and know exactly what has been paid and what has not. You will also have an organized record of payments and receipts that you can easily access if an issue about a payment arises. But most importantly, this is a very easy system to implement that will keep you from stressing out over not knowing who, what, when or how much needs to be paid.