I spent a good part of Thanksgiving weekend tidying up and organizing a home. To give you an idea of the size of job there are 2 pieces of information. 1) 2/3 of the floor in the home was not visible and 2) No recycling or anything else had been removed for about 10 years. You may wonder what this has to do with personal money management. A lot!

There were many boxes filled with bits of paper. Many of the papers were important and many still in their envelopes. The owner of the home was having trouble finding things when he wanted them. Particularly, important papers. This was the source of increasing anxiety.

Are you organized? At the end of the day, the information wasn’t difficult to sort and it wasn’t difficult to set up a filing system. In order for it to work, it needed to be simple and have clear guidelines with respect to what to keep and where to put it. In a nutshell, here are the guidelines:

1. Sort all papers as soon as they are received, discarding unwanted items (shred those with personal information and recycle others).
2. Group categories such as Banking & Credit Cards, Investments, Insurance/Property Taxes, HealthCare and Income Tax.
3. Create a ‘current’ file for receipts (file them by month) and utility bills (discard/shred once the next month’s arrives).
4. Create a ‘current’ file for the year’s income tax information.
5. Decide what credit cards you will maintain and which you will close.
6. Decide what charitable organizations you will support and how much (annually) and tell the others what you decide.

It’s was an overwhelming job but by tackling it 1 box at a time, it was manageable. It was amazing to see over 10 boxes of paper be filed and organized into 4 boxes.

The bottom line is that the state of chaos was the source of much anxiety for the person. Unable to find things and feeling guilty that he wasn’t ‘on top of’ their papers was leaving the person feeling self-conscious and inadequate. It wasn’t hard work to change and hopefully it will give the person piece of mind that their financial documentation is in good order.

The other huge benefit was seeing a clear picture of the individual’s financial situation and capabilities. Because of the lack of organization, bills were lost and not paid and charitable organizations had been sending multiple requests for funding each year. Surprisingly the finances were quite simple in terms of number of credit cards, bank accounts and investments. Keeping it simple yet having the right system to serve the individual’s needs is the highest priority.