I have a habit I am not very proud of. I am cluttered, which can lead to carelessness as well.
So, my desk at work is always strewn with papers, especially bills. Enough number of times I waste quite a bit of time locating some of them at the appropriate time and have sometimes even missed some of them.
As a kid too, I shared the room with my sister and everyone in the house knew that I could be credited with any mess in the room.
However, to my own surprise, as soon as I started pulling my own weight and living life on the money I earned, the one aspect of life that I have become organized in is Personal Finance, be it digitally or in hard copy.
What does it mean to be financially organized?
Being financially organized refers to the act of having a system in place to keep all documents related to your financial life. In case of a household, this would mean a common place to share details about all individual and joint financial assets and liabilities. Of course, this is possible only if there is ample trust between the couple that this information will not be misused.
The importance of being financially organized
Being financially organized takes some time initially and gradually becomes a habit. One thing that it does do, is come with a host of benefits like:
- Accessibility: In case any information is required at a moment’s notice, this ensures that you are no longer scrambling all over the place to get your documents in place.
Eg. You have been really busy with a project at work and suddenly realize that the last day of submitting investment proofs for tax saving is on the next day. Instead of hunting the house down, you can calmly walk to your file and have the investment proofs ready.
- Emergency: In the unfortunate event of a medical emergency, one of the first requirements is a high amount of cash. Later when you want to reimburse the expenses you would also need the details of your health insurance policy, for which you no longer need to waste your time.
- Transparency: Financial cheating is a common reason for couples to break up today. Having access to such information at a commonplace ensures transparency and also builds financial trust between the couple. Both of you then know the financial situation of the household as a whole and trust the other will not misuse this privileged information.
- Taking stock: Just like net worth, being financially organized can also give you a good idea of the number, kind and magnitude of assets that you own and the liabilities that you owe. Though in all fairness, that picture is much more vivid and on the point with net worth.
How to be Financially Organised
There are two ways to be financially organized – digitally or offline. You can either have a shared password-locked excel file enumerating all the details or you can keep a piece of paper with all the details jotted down on it at a safe place.
While the digital method comes with a risk of getting into the wrong hands, it is far more accessible. On the other hand, the offline method may be safer but loses out on the accessibility aspect. Discuss what works better for you and go for it.
The more details that you add into this, the better this will serve you. To get you started, I have listed out a comprehensive list of details and documents to have in one place and quickly accessible.
Start with organizing your finances today using the above list as a good guiding document. This will help streamline the otherwise disparate aspects of your financial life.
Take your first step today. Sign up for the Elementum Money Weekly Newsletter to download the Financial Feminist checklist. Also, get nuggets of financial wisdom with our 3 posts every week, directly to your inbox. Have more questions, feel free to send any of them my way at firstname.lastname@example.org.