How to Organize Your Personal Finances

Organizing your personal finances can be a headache. There are several reasons a person might not wish to organize their personal finances: they may fear what they will uncover, they may have a rather large pile on the desk of bills, receipts and statements or they might just feel overwhelmed with the idea of categorizing all of the different bills they have. Organizing and managing your personal finances is the first step to financial freedom.

Here is one way that will help you understand how to organize all of your finances.

Begin by gathering all of the statements, bills and other paperwork that might be sitting on your desk. Get it all together so that you can begin going through all of it. This may seem overwhelming at first, but once you set up your method of organization, it will go quickly.

Now, you should buy a file cabinet or a small filing bin. Purchase one that allows you to use hanging folders. Then, pick up some manila folders to put in these filing folders. Make sure you have at least 10 hanging folders and enough manila folders to cover all of your accounts.

Label your hanging folders with the following categories:

Credit Card Debt
Insurance
Loans 
Utilities
Housing
Investments
Retirement
Tax Information
Credit Reports

Now, it is time to sort this out. Each of these folders will contain manila envelopes as follows:

Credit Card Debt - make one manila folder per credit card. Hopefully you have been diligent in paying your credit card debt down, but if not you will want to label your each credit card name in RED pen. This will make them stand out, and will remind you to take care of this bill as soon as possible. The danger of credit card debt is a whole other topic! Now, with each folder having a credit card name on it, place any related statements into these folders. You now should have a place for each piece of credit card related mail. Keep only the essential things, privacy statements, rate increases and monthly statements to keep the file nice and tidy.