If you are on to Part 2, you are serious about getting organized and making your finances more manageable. The act of getting organized, gets you familiar with what you own. This will lower your stress level and give you a quick handle on how to solve all the stressful financial questions life throws on you. STAND TALL financially. Be in control of what you own and where you are going in the future based on your actions now.
Remember the bin or electronic filing cabinet you have from Part 1 of this article? Now it's time to separate.
1a. TAXES: Use cool file folders that make you happy! Make it simple – Everything that goes to your accountant for taxes put in one pile and everything needing organization and management throw in another pile.
1b. For advanced organization separate the “other” pile into more detail – Label Insurance, legal documents, prepared taxes, Bank and Investment Statements, Health Statements, Corporate Benefits Statements, Etc.
Decide to Outsource or Do it Yourself
To determine whether you should outsource financial organization or do it yourself, you need to be able to answer the following series of questions with your finances by reading your statements.
- What happens if I live a long life? (how much money will I need when I don't want to work anymore?) What are my monthly expenses? Do I have enough to cover them and for how long?
- What happens if I lose my job?
- How will I pay for my children's college education, how much do I need?
- How do I pay my bills if my spouse or I become prematurely disabled and can't work anymore?
- For Singles with no dependents: What happens to my assets if I die unexpectedly?
For Married or Single with Dependents: How will my family be able to support themselves financially if my spouse or I am no longer around to bring in a paycheck?
- What are my annual expenses and income?
- What happens if I or a family member suffers from a major medical catastrophe?
Do It Yourselfers: Keep records and answers to the above questions in the same place you hold on to these documents. Ideally, you should find an app or program that allows you to compile all your finances in one place. One that gives you an electronic filling cabinet and passes the banking security rules for online protection. Be able to back up your answers with documentation from your financially organized binder or electronic files. Store all in one place – like a binder or the bin from part 1. It's a good idea to have one hard copy and one backup copy in a secure online cloud storage location. That should keep you covered.
Outsourcers: Hire a trusted financial professional. I recommend you hire one that gives you access to an online dashboard for all your money matters. On your dashboard you should be able to see your 401k, company stock, investments, insurance, credit cards, spending accounts and other bank accounts in one place. You should be able to pull up quickly a net worth statement with all your assets and liabilities from this online dashboard. Hire someone that will answer all your questions above and the ones that come up from time to time. (Can I buy a new car? Lease or purchase? Can I afford a first or second home? Etc…) Make sure your financial professional can store your documents in a safe vault online where you, your family, and your professionals can store and share documents. Lastly, and very important, hire someone you like. Organizing and managing your finances is no fun, but it can be, if you are working with the right professional; someone you enjoy speaking to when things come up in your life. Once you've gathered your information, your financial professional, will do all the heavy lifting for you in organizing, compiling and getting you straight and on the path to financial control.
How do you know if you are financially organized? When you are able to answer all of these questions and support the questions with the appropriate documentation you've got it together. Take it a step further, when you can answer these questions and be satisfied you are financially secure and working towards financial independence, you are achieving Financial Happiness. This is a long process. Don't be afraid of it. Just know, the best place to start taking financial control is by getting organized.