How to Organize Your Financial Accounts

For most of us, getting organized is a pipe dream. The random creams, pastes, and oils in your bathroom cabinet will probably never be color coordinated or arranged alphabetically. Your sock drawer will probably be a nest of tangled and mismatched cloth until the day you die. Your DVD collection… well, at least now you can use Netflix instead.

But whether you’re naturally tidy or a chaotic mess, there’s one area of your life that truly needs to be organized: your finances. You can get away with a messy garage or a cluttered basement, but working toward financial goals without a discernible structure is like trying to build a home without pouring a foundation.

If your finances are as disorderly as the rest of your life, here’s an argument for making a change – and how to actually do it.

Why You Should Organize Your Accounts

There are few things duller than making sure you know where your life insurance monthly statement is or how to access your 401k. But like exercise and a healthy diet, organizing your financial information is important even if it’s the last thing you want to do.

It’s crucial to have a firm sense of where you actually stand financially. Do you have a positive net worth or do you have more debt than you realized? Are you adequately insured? Did you update your beneficiaries when you had kids or got divorced?

Being aware of your financial health lets you plan for the future more accurately. You can’t adequately prepare for retirement if you don’t know the value of your assets or where they’re located because you won’t be able to set accurate and realistic goals. Knowing the total balance of your 401k and IRA can inform whether you’re on track or woefully behind.

There’s also a motivational component to this. By starting from a firm foundation and keeping close track of where your finances are headed, you’ll be able to measure your progress towards the goals you care about.

Think of it like a weightlifter. You might be able to get stronger by consistently lifting random weights, but you won’t be able to fully appreciate your success. By having an accurate sense of how much you lift every session, you’ll have an exact measurement of how much stronger you’re getting week to week.

If you can’t muster up the willpower to do it for your own sake, consider your family. People pass away every year without disclosing relevant financial information to their loved ones, leaving them in the dark about everything from retirement savings to insurance information. By organizing your accounts and passwords in a secure location, you can make the grieving process easier for your spouse, children or any remaining family who might inherit your estate.

Find and Maintain a System

There are multiple ways you can organize your financial accounts. You can use a pen-and-paper system, an Excel spreadsheet or an app like Mint. Apps sync to your financial accounts and keep them updated every time you log in. Some even send notifications if you’re running a low balance or if you were charged a late fee.

The benefit of using a spreadsheet is that you can customize it to fit your specific needs. It won’t be able to pull information automatically, so this works better for someone who doesn’t mind tinkering for a few hours every month.

A digital cloud like Google Drive or Dropbox is the best place to store your records since you can access it anywhere and they can’t be physically stolen or damaged. If you do keep records on the cloud, use a secure password and enable two-factor authentication, which means you’ll have to provide a unique code if the account is accessed.

There’s no right or wrong way to track and manage your financial accounts. The key is to pick a system that’s easy for you to use on a regular basis.

Keep a running list of every financial account you have, including:

• Bank accounts
  • Checking and savings
• Health Savings Accounts or Flex Spending Accounts
• Credit cards
• Retirement
  • 401ks, IRAs and brokerage accounts
• Debt
  • Mortgage, student loans, auto loans, home equity loans or lines of credit, personal loans, medical debt and more
• Insurance
  • Auto, health, disability and life insurance
• Taxes
  • W2s, 1099s, and other tax-related forms

You should know the following information for each account:

• Account number
• Username
• PIN
• Total balance
• Beneficiary

For debt-related accounts, write down the interest rate, monthly payment, the total balance remaining, loan provider, loan term and any other relevant details. If you can’t remember where to find all your accounts, check your credit report. It will list all credit-related accounts, even those that are closed.

Still feel like something’s missing? Check sites for unclaimed money that the federal or state government is holding in your name. These funds can come from a closed bank account, undeposited tax refund or a life insurance payout. Be sure to check both federal and state websites since it’s not clear where your money might be. I like to check these websites once a year just to make sure there’s nothing I’m forgetting.

If you’re married or have kids, repeat these steps for your spouse and children.

Don’t Forget Your Inbox

Now that everything is online, our inboxes have become a digital dumping ground for financial documents. Whether you use Gmail or Outlook, you can organize financially relevant emails by adding labels or assigning them to specific folders.

I’m self-employed, so I keep all records of business-related purchases so I can deduct them at tax time. I categorize all potential tax-deductible receipts in a “Taxes” label. When I’m updating my income and expenses spreadsheet, I refer back to the email label to see what I can deduct.

If you prefer to use paper records, keep them in clearly marked folders divided by account or year. Use a fireproof safe that you can easily grab in case of emergency, but keep it hidden where a burglar won’t be able to find it quickly.