Creating A Financial Plan

The New Year is here and it is the perfect time to become financially organized.

While creating a financial plan isn’t the most glamorous task on the planet, it is necessary. Understanding your finances and where your money is going every month is an important part to obtaining financial freedom and to stop wasting money. I’m constantly looking for ways to improve the way I track and organize my finances.

The web has stepped in to help consolidate the information from various sites that hold all of our financial information. Checking one website for up to date financial information will save you time and even money! One such site, that is free, is It offers a personal budgeting tool as well as consolidates all of your credit cards, bank accounts, assets, loans, 401k’s, and stock portfolios all on one page. At any given moment you can find out your net worth. One nice feature within Mint is the reminder emails and alerts when credit cards or payments are due. The site offers many possibilities for managing email updates.

The second aspect to being financially organized is to tackle the amount of paperwork that undoubtedly arrives in your mailbox. Organization is key; it is best to handle the paper as soon as you touch it. I recommend investing in a filing system. One file box or cabinet with various folders to hold all of your papers. The following is a list of recommended file folders:

• Tax Returns – this file should contain four sub folders, for the last three current tax years as well as the current one.
• Retirement Accounts – create a folder for each retirement account you have ( IRA’s, 401k’s, etc)
• Social Security – keep a folder for your most recent social security benefits statement
• Investments – keep a folder for every investment account you have (stocks, bonds, mutual funds, etc)
• Savings & Checking – keep your monthly statements here in a separate folder. Generally it is best to keep statements for a few months and certainly not for a year.
• Household Accounts – if you own a home or are renting you will have statements and receipts for various household related items. Create a folder for each account.
• Credit Cards – keep a folder for each of your credit cards, if you receive paper statements, file them away here. If you have debt, be sure to keep those accounts at the forefront.
• Other Liabilities –keep folders for your other debts, including educational loans, car loans, personal loans, etc.
• Insurance – create folders for each of your insurance policies

If you find yourself with additional financial related topics that can’t be filed into one of these categories, create the folder and label appropriately.

Due to the current economic condition, no matter what financial situation you find yourself in, it is imperative to be aware of exactly where your money is. Ignorance is not bliss in this situation. By organizing your finances, you will be better able to track and tackle any outstanding debts you may face. You may even find extra money for that “new item” you have been wanting! 🙂