Organizing your finances can simplify money management

Organizing your finances for specific goalsMany people think that sufficient income and limited debt are the keys to a healthy financial picture, but individuals shouldn’t underestimate the importance of organization in a solid financial profile. While it may be difficult to see the positive results of a good filing system on a person’s overall fiscal health, a recent CNN Money article highlighted the ways in which this small step can have large money and credit benefits.

Citing the results of a recent poll, CNN Money reports that 25 percent of Americans have admitted to losing or forgetting about an important financial document, and only 40 percent expressed confidence at being able to locate a significant paperwork immediately. In addition to causing anxiety and frustration, tossing bills in a pile, failing to file bank statements and tossing mail from lenders without reading it can have disastrous consequences for a person’s bank account and credit score. For example, individuals who idly throw mail into a drawer may fail to see correspondence from service providers and lenders, ranging from opportunities to lower their bill to an overdue balance of which they were unaware. It’s also easy to get busy and forget about an impending bill due date, which can lead to late fees, penalties and potential credit score damage.

Organizing financial paperwork can make life easier

To avoid these harmful scenarios, consumers should take a day to compile all of their paperwork, both old and new, and go through it to weed out unneeded documents and file important information. Doing so can give individuals a great deal more control over their money dealings and ensure that not only are all payments submitted on time, but that they have an accurate picture of their financial standing.

When developing a keep and toss pile, consumers should know how long to keep certain documents. Old ATM receipts and deposit slips that have posted can be thrown away immediately, as well as old credit card statements that don’t include tax-related information, CNN Money reports. Some information that may be used for tax purposes should be kept for one year, such as pay stubs, medical bills that can be written off as a deduction and brokerage account statements. Lastly, there is data that individuals should keep for the long haul, including mortgage documents, retirement and insurance paperwork, property deeds and ownership papers.