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Tidying Up Your Financial Life - Part 2

July 2019

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

As noted in last month's Small Steps to Health and Wealth™ financial message, it is not common for people to do "spring cleaning" around their home to clear out clutter and organize their "stuff." This same concept can also be extended to organizing our personal finances.

Eight specific tasks to "tidy up" your finances were shared previously. Below is a list of eight more ways to simplify and organize your financial life:

  1. Automate Recurring Financial Transactions. Put bill payments and savings deposits on "automatic pilot" if you have a steady income. Doing so will save time writing checks and money spent on postage. Other good candidates for automated transactions are checking account to savings account transfers and automatic investment plans for the purchase of shares of stock and mutual funds.
  2. Document Your Digital Assets. Make a list (PDF) of all the usernames, passwords, PINs, and other details related to your digital life. Examples of digital assets include benefit (e.g., airline frequent flyer rewards and retailer loyalty programs), e-mail, financial, online merchant, organization, and social media accounts. Make sure that several trusted individuals can access your digital inventory information, if needed.
  3. Prepare a Spending Plan (Budget). Track income and expenses for a month or two to get a good read on monthly cash flow. Then prepare a spending plan based upon this information. Rework the numbers as needed until monthly income equals the total of fixed (including savings), flexible, and occasional (1/12 of the annual cost) expenses. Revisit the spending plan periodically as "life happens" and income and expenses change.
  4. Check Your Credit Reports. Request a free credit report once every four months from each of the "Big Three" credit reporting agencies. For example, check Experian in April, Equifax in August, and TransUnion in December. Review written or online reports carefully for evidence of incorrect information or identity theft.
  5. Prepare or Review Estate Planning Documents. Review each of your estate planning documents (e.g., will, living will, and power of attorney) to make sure that they still reflect your wishes. Also make sure that all parties named in your documents (e.g., executor, guardian) are alive and willing to serve.
  6. Check for Available or Expiring Rewards. Review recent credit card rewards statements. You may have hundreds (or even thousands) of dollars available to spend. Also check to make sure that you don't have gift cards tucked away, especially those that charge inactivity fees, and airline miles that are about to expire.
  7. Prepare a Home Inventory. Use a cell phone camera or video to document what you own. Take photos or video footage room-by-room and store the files away off site or in the cloud. Supplement photos and videos by completing a home inventory worksheet (PDF) and storing it digitally along with scanned receipts for major purchases.
  8. Organize a Home Financial Center. Designate one place in your home to store all of your financial records and to do routine financial tasks such as bill-paying and reconciling your checking account balance. Your financial center can include a computer, desk, table, filing drawer, or cabinet. The choice is up to you. At the beginning of each calendar, earmark a large envelope for tax-related materials so they are collected year-round.

Take some time this month to address your financial "clutter." You are likely to feel very productive and satisfied when you are done. Every small step matters. For additional information about tidying up your finances, review this University of Florida Extension fact sheet Financial Recordkeeping: Organizing Your Financial Life (PDF).