Getting organized: Time to get your financial house in order
Getting and keeping your financial house in order is an important ongoing household task, but in these changing financial times it’s particularly important. With all the financial uncertainties you want your important paperwork and digital files readily accessible.
Quick: do you know where your birth certificate is located? Your Ghana Card? Your health records? Your marriage certificates? Deed to your house? Your vehicle registration certificate? How about mother’s will or your folks’ durable power of attorney? Where’s your employee benefits booklet?
A key and fundamental step in sound financial management is getting organized and staying that way. It’s also the starting point to sound personal money management.
Good organization is the foundation for making wise fiscal decisions. Even with the help of technology, we still have to deal with a rising mound of personal and financial paperwork.
Paperwork starts with our birth certificate and keeps getting bigger and more complex with each coming year. Bills, statements, medical records, taxes, kids’ educational paperwork, warranties and receipts — the flow of information can easily seem overwhelming, especially when files or critical pieces of paper scattered go astray.
And who has time for long-term planning when there are bills to pay and last year’s tax records to get ready for the tax preparer?
Investing a little time now to set up or fine-tune a system that works for you will simplify your record-keeping and financial management forever. You’ll also benefit by:
- Saving time when you pay bills, work on tax returns or make financial decisions.
- Avoiding overlooked expense reimbursements or tax deductions you’re entitled to.
Being sure that in a family emergency, critical documents and information are accessible to those who need them.
- Eliminating stressful last-minute searches for information or documents.
- Avoiding penalties because of missed or late payments, or being caught short of funds when large obligations unexpectedly come due.
- GETTING STARTED
- Think of organizing your personal finances in four general areas:
- 1. Paperwork. This is all about managing information, both digital and paper documents. We all have birth records, school records, health records, insurance policies, tax records, bank statements, paid bills, correspondence.
- This information is commonly disorganized and difficult to access quickly. The key here is to give yourself some flexibility by setting up and using a filing system divided into five categories — Primary Documents, Action Files, Main Files, Historical Files and Family Memorabilia and Projects.
- Also, using a single “Things To-Do List” and calendar to track things you need to accomplish and remember can be helpful. Keeping these near a current list of the names, addresses, phone numbers and e-mail addresses of your family, friends and financial and household advisers can also be a real time saver.
- Obtain a credit report each year to see if it is accurate and up-to-date. This can save you time and trouble in the future. You can get a free one
- 2. Net Worth. This is what you own, less what you owe.
- Once a year it’s a good idea to inventory what you own and what you owe, and create your own personal net worth statement. Compare it to last year’s statement and see if you are improving your financial position.
- When you do this, list the “fair market value” of what you own, not what you paid for items.
- 3. Cash Flow. This involves more than just creating a budget. Understanding what you earn and how you are using your money gives you more power over your life.
Ask yourself what you need or want? What you can afford today or that you need to save for?
- Where can I achieve just as much or more satisfaction from by spending less money?
- Attending an expensive concert or going for a country walk when I have no money in my account??
- Renting a video instead of going to the movies?
- Making a gourmet lunch instead of eating out?
- Waiting another year to buy your next car or take that special trip?
Managing your money wisely, not emotionally, is the key to gaining control over your financial life and giving you the best chance of reaching and maintaining your lifelong goals.
4. Employment Benefits. For millions of workers and small-business owners, employment benefits are a hidden paycheck. Any amount your employer contributes to your insurance — health, vision, dental, disability, automobile, long-term care and life — future retirement, financial planning and other benefits is money you don’t need to spend with your after-tax dollars.
It is a good idea to review your benefits package annually to see that you are taking full advantage.
This is also a way to compare employment opportunities; as some employers provide their employees with benefits that can range from 5% to 40% of salaries!!!
Authors: Dr Benjamin Amoah, Department of Finance University of Ghana Business School; Peter Asare Nyarko, Executive Director CFLE Africa, Accra; Valentino Sabuco, TFAF, California, USA
|“What Creates Clutter? …my perception is that at a basic level, there is really just one flaw: a failure to systematize common decisions. Whenever I leave things lying out, it’s because I’m not ready to decide what to do with them yet. So the process of organizing really comes down to having a system for automating decisions about where everything goes. Disorganized people have few or no systems, so they must make every decision on a case by case basis. Eventually this becomes overwhelming, and clutter begins to pile up. Organized people will make far fewer decisions in the long run. It takes far more time to be disorganized than it does to be organized because disorganized people lose so much time to inefficiency.” ~ Steve A. Pavlina|
Stay safe and healthy – there’s lots of work to do and fun to be had!!!!!
Wishing you all the very best,