Organize Your Finances In Three Easy Steps


Like any area of life, it pays to keep your finances in order. Organizing your finances lets you ensure that your money is being used wisely. It also helps eliminate financial clutter in your life. Get your finances organized with these three steps.

1. Close Accounts That No Longer Fit Your Needs

Over your life, it is possible you have accumulated an assortment of accounts that you no longer need. Start by closing any checking, savings, or investment accounts that you no longer use.

Next, take a look at your credit card and loan accounts. Since the length of your accounts is considered on your credit report, you may prefer to leave your oldest accounts open. However, you should simplify your financial life by ridding yourself of accounts that you no longer use. For example, if you have old department-store credit cards that you haven't used in years, it is time to close them.

Check and make sure that your accounts are still working for you. If they have high fees or unfavorable interest rates, it is time to dump them.

2. Get Your Estate-Planning Documents Prepared

After your death, you want to make sure that your assets and belongings go to your intended beneficiaries. Make this a reality by completing your estate planning.

Start with a will. A will lets your heirs know who you want to receive which accounts or personal possessions. It also lets your wishes be known concerning your children or pets.

After your will is complete, set up accounts for estate planning. Revocable and irrevocable trusts are two possibilities that might belong in your estate. Both of these accounts allow you to pass money to specific heirs, with specific guidelines governing the use of the money.

Don't forget to consider your personal accounts. If you know who you want these accounts to go to after your death, make the accounts payable on death (POD). Making an account POD permits the named individual to access the contents of the account after your death. While you are still alive, the named individuals have no access to the account.

3. Monitor Your Assets and Debts

Set up a spreadsheet so you can keep tabs on your financial picture. Items to track include retirement accounts, checking accounts, savings accounts, property values, and debt balances.

Try to update the spreadsheet once a month. By doing so, you'll have a better idea of how your net worth is increasing or decreasing. If you aren't happy with how your finances are evolving, you can take the necessary steps.

Getting your finances organized can seem daunting, but it is a necessary chore. Once you're organized, you have a better idea of how your money is working for you. For help with better organizing your finances, consider using a financial planning product like Plan My Affairs.


19 October 2016

Will You be Ready for Retirement?

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