How to Save Money by Organizing Your Finances

If “goblin mode" is more your style than neatnik, tidying up your finances may sound about as appealing as a root canal. But you might be surprised by how powerful watching a few #cleantok videos and decluttering your home and digital life can be—not just for your personal wellness, but also for your wallet.

You'll not only save your future self from unnecessary stress and hassle. Clearing financial clutter and setting up a sustainable system for managing cash and organizing paperwork will also help prevent you from making avoidable mistakes, such as losing bills, missing investment opportunities or accidentally overspending.

Read on for more insight into why organizing finances is important, along with tips on how to make an organizing system actually work for you.

Why Organizing Money Matters

If avoidance is your go-to strategy for dealing with your finances, then taking time out now to manage and review all those bank statements, term alerts and other money-related communications piling up in your room or clogging your app notifications might at first feel triggering. But bravely facing your finances head-on and getting a clear-eyed view of where you stand could be key to reducing your stress long-term. For example:

• • You'll learn a lot just by doing it: Reviewing old bank and financial statements before you file them can teach you a lot about your personal finances. So can regularly checking your credit score and pulling your free credit reports from AnnualCreditReport.com. You'll get a better idea of where you stand, and you may even feel inspired to think more about what you want going forward. (And who knows, you could learn you're in better financial shape than you thought.)
• • You'll become more aware of your financial patterns: Similar to therapy, looking backward at old money habits and patterns can help expand your awareness and give you some helpful clues for where to invest your time and energy. Plus, with more awareness, you'll be less likely to repeat past mistakes.
• • It will be easier to save: Combing through your transaction history or using apps to help you visualize your spending can be an effective cost-cutting strategy, allowing you to quickly spot money-saving opportunities, such as overpriced utilities or rarely used subscriptions. Even better: If you route those extra savings to an emergency fund, you can afford to worry less about the future since you'll be more prepared to withstand whatever comes your way.
• • You'll be less likely to overspend: Just cleaning up a room or two or tidying up old downloads, for example, can help you save money by making it easier to see what you own, so you don't buy more than necessary.

Some research even suggests that proactively thinking about your finances as you organize them and taking steps to improve your circumstances could help boost your mood and give you a greater sense of control over your financial life.¹ A major longitudinal study funded in part by the National Endowment for Financial Education also found that young adults who take proactive steps to improve their finances tend to be more resilient to stress and better equipped to adapt to sudden changes.²

Some consumer protection laws also require you to be extra organized and aware of your money in order to take advantage of their protections. So it's important to keep tabs on your financial paperwork, just in case. For example:

• • Thanks to the Fair Credit Billing Act, you have the right to dispute billing errors, such as double charges to your credit card. But you first need to catch and dispute the error in writing within 60 days of the bill being sent to your address.³
• • The Fair Credit Reporting Act also gives you the legal right to dispute errors on your credit report so that your credit score isn't harmed. But to be successful, you may need to provide persuasive evidence supporting your dispute.⁴ You should also make a habit of regularly reviewing your credit reports to ensure the information is accurate.

7 Tips to Help Organize Your Finances

The key to building a system that works for you is to understand your personal needs and preferences and find work-arounds if some good-to-have habits—such as promptly opening and reviewing your financial mail—don't come naturally to you.

Try experimenting with different organizing systems, and adjust your approach as you go. Here are some beginning steps you can test out immediately and tailor over time.

1. Put information somewhere easily accessible and visible

If you tend to forget when bills are due, try marking up a physical calendar with due dates and place the calendar where you can't miss it. Similarly, if you find yourself spending hours at tax time sorting through financial paperwork and receipts, put your data into a free, web-accessible spreadsheet, such as Google Sheets or a Notion database. Or scan your financial paperwork so that the PDFs can be easily searched and accessed with a computer.

No matter what kind of system you choose, do your best to keep a written record of important financial information, such as your monthly income and spending, tax and investment numbers and other key financial data. Then, put those details in an easily accessible location. That way, you can quickly reference them when needed.

2. Design your system so that it feels easy to use and intuitive

An intricately designed, meticulously labeled organizing system might look great on camera, but you could have a tough time sustaining it if the steps required to maintain it run counter to your instincts.

Rather than fight your nature, work with it instead. For example, if you have a habit of throwing unread mail into haphazard piles, try setting up bins labeled by priority that you can quickly throw the mail in and deal with later. Or pick up a special financial planner with pockets that are roomy enough for you to slip in bank letters and bills and easily pull them when you're ready to review.

3. Make it fun and dress up your new organizing system

If you enjoy looking at your financial files (or at least the folders holding them in place), managing their contents might not feel so drab. So go ahead and add a splash of color to your files.

If you're a creative type, get crafty and freely decorate the file folders, binders or digital pages you use to store your information. Or use a color-coded system that makes you smile to help you navigate your files more quickly.

Similarly, try dressing up the spreadsheets you use to track expenses or other financial information. For example, play with eye-catching fonts, color-code your columns, add images you enjoy looking at or highlight cells with your favorite colors.

Or, if you're using an online app that lets you pick icons for your digital pages and files, use the symbols to help you quickly visualize the contents. But be sure to keep those symbols simple and consistent so your brain doesn't have to work too hard to remember them.

4. Use the bucket system to help you organize your financial plans

Simplifying your organizational system might also make managing your finances feel less like of a chore. If you feel overwhelmed when drafting a budget or when thinking about your long-term finances, try organizing your money with an easy-to-follow financial framework that divides your income and spending into simple buckets. Rather than dividing your budget into a lot of categories, stick to just a few, such as money for bills, money for fun and money for the future.

5. Reduce friction by setting up dedicated accounts

If you struggle to mentally juggle how much money you need to keep available for different goals and short-term uses, you may find it less taxing to divide your funds into separate accounts—each with a special purpose—instead of leaving your money mixed together in one or two accounts.

For example, you might use a money market account with check writing privileges for your housing costs, a checking account for everyday spending, a certificate of deposit (CD) for vacation money and a 401(k) or IRA for retirement funds.

6. Automate as much as possible. Then regularly check in

We live in an age where it's extremely fast and easy to automate your bill payments and view your spending through AI-created charts. So take advantage of the plethora of money apps and digital tools available to you. Or, if you're more of a spreadsheet person, explore different ways to automate and track your finances.

But don't let the ease of automation tempt you into ignoring your account alerts or financial status. If you don't pay attention to your funds, you could easily overlook hits to your financial health, such as prescheduled payments draining your accounts, unauthorized charges or billing errors inflating your card balances or auto-subscriptions renewing long after you've stopped using them.

In addition to automating your bill payments, you can also automate your savings. Then, sit back and watch your bank account grow.

7. Commit to maintenance

Once you've settled on a sustainable organizing system, do your best to maintain and actually use it. This might not come easily at first, especially once the excitement and novelty of a new system starts to wear off. But once you've made reviewing and organizing your finances a habit, you will likely find it easier to stick with long-term.

In the meantime, try setting regular dates with yourself to deal with and organize your finances, and pay special attention to anything you reflexively avoid. Then, reward yourself each time you follow through on your intentions. For example, if you've been avoiding sorting through your financial mail, take a pile with you to a coffee shop and treat yourself to something extra once you've finished going through it.

The Bottom Line: Do What Works for You!

Not every financial organizing system or well-intentioned tip is going to be practical or feasible for your uniquely wired brain—and that's OK. So don't worry if a life hack or system that works for someone else isn't nearly as helpful to you. Just keep experimenting, and you'll eventually find your organizing rhythm.

The progress you make now, however small, will pay dividends with time. So keep going, and try again each time you backtrack or stumble.

Your future self will thank you!

 

Kelly Dilworth is a business and personal finance reporter, specializing in the intersection between money and life. She has covered consumer banking and lending for more than a decade and particularly enjoys writing about consumer behavior and psychology, new consumer research and how everyday banking products impact people's lives.

 

READ MORE: 5 Ways to Build Confidence in Your Money and Yourself

 

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