How to get financially organized in three easy steps

If there was something you could do that would create peace of mind, save you time, help you make smarter and more informed decisions, and allow you to better adapt to changes in your financial life, would you do it?

All of this is possible if you get financially organized.

It's a critical first step in any financial plan.

Getting organized allows you to see the bigger picture, understand how every decision in life and with money is connected, and navigate those decisions with greater clarity and confidence.

And while getting financially organized can feel like a daunting task, we have three simple steps to help you get your financial situation in order.

Step #1 - Organizing your financial landscape

Let’s kick things off with a checklist of the key areas to organize your finances successfully.

Earnings

List all of your income sources – work, investment income, rental income, or retirement-related income (Social Security or pensions). The goal is to understand what you earn throughout the year before you account for any work-related deductions (from benefits and retirement savings) and taxes.

Workplace benefits

List all of the benefits you have through your job. This includes group benefits like health, disability, and life insurance policies plus your workplace retirement plan. Your company should provide an annual summary or a website where you can access your elections.

Taxes

Always have a copy of your most recent tax returns handy. You want to look at things like your income sources, the deductions you are claiming (standard deduction versus itemized deductions), any tax credits you qualify for, and the amount of your refund or shortfall. It’s also helpful to know your marginal tax rate (the highest rate you pay) for tax purposes.

Savings

List all your bank accounts, including those with credit unions  – checking accounts, savings, and CDs. Keeping track of the type of bank account and any interest you may be earning will help you stay organized.

Borrowing and debt

Start with listing any outstanding debts you have including, but not limited to, mortgages, car loans, student loans, personal loans, and credit cards.

You want to list to whom you owe money, the balance, interest rate, monthly payments, and when your final payment due date. Also, check your credit report to make sure there are no errors in your credit history. 

Insurance and estate planning

For insurance, list all of your policies. This includes life, disability, health, and insurance on things you own like your home or car. 

For estate planning, make a list of any documents you currently have. This includes your will, financial power of attorney, and healthcare power of attorney in most cases.

If you have a trust, make note of this as well.

Investments

Make a list of all investment accounts you have. Include your company retirement account (e.g. 401(k) plan), your individual retirement accounts (IRA and Roth IRA), and any taxable investment accounts you may have.

If you have children, you can include those accounts – like an education savings plan – as well. Keep track of the type of account, the balance, and what you own in each (this is good for reviewing your overall investment strategy).

Other things you own (the rest of your assets)

This includes your home or other real estate, any cars, businesses, and other items that matter to you (wedding ring, artwork, collectibles). Keep track of the asset and its value.

Step #2 - Planning for your future - how life milestones affect the bigger picture

Throw a rock into a pond and the waves ripple across the entire surface in all directions. Make a decision in life and it too can have an impact that ripples across your financial landscape.

Think about a few specific goals you want to achieve or a milestone you are approaching. How will that goal or milestone affect the topics we just walked through above?

Personal: What plans do you have for the next 12 months? What about the next 3 to 5 years? Are you getting married, starting a family, buying a home, changing jobs, or approaching retirement?

Professional: Are you expecting a promotion or raise? Starting a new job? Did you earn stock (equity) compensation? Do you want to start a business or a side hustle?

Financial: Are you about to hit your emergency fund goal or pay off some debt? Do you need to adjust your retirement savings plan? What about a plan for your kid’s education? Do you need to adjust your savings following a big purchase (car or house)?

Being organized will help you see how every decision you make, in life and with money, affects everything. It will also help you adapt your plan along the way.

Step #3 - Thinking about the big picture and where you stand

When getting organized, start by picking one area of your plan. Trying to tackle all of this at once can feel overwhelming. As you work through each topic, ask yourself the following questions to assess your overall financial health.

• When was the last time you looked at each item on the list and how often do you review it?
• How do you feel about your current state or the progress you are making?
• Are there any changes you want or need to make today or in anticipation of an upcoming life milestone?
• Do you want to better understand what steps may be best for your overall plan?

What did you discover?

Most people find there is a good amount to organize and to work through, and that’s OK.

Remember that the goal of this exercise is to help gain clarity, reduce stress, and help you make smart, informed decisions to support the life you want to live. And all of this is possible through the simple act of getting organized.