16 April 2013

HACK REQUEST: Organizing your finances

Photo credit: FreeDigitalPhotos.net
Photo credit: FreeDigitalPhotos.net
It's April 16 which means the taxes are DONE. PAID. Time to exhale. (You, too? Are you feeling as relieved as I am? Let's take a moment to high-five. We've earned it. *smack*)

When you're self-employed, there's plenty of tax-related recordkeeping to do. I've never set up a consistent system, though, so getting the numbers together for my tax preparer is still a fair amount of work.

That's right, I don't even DO my own taxes, and I still find the whole process...taxing.

This year I want to do a better job of organizing my financial life so that tax time is more about gathering easily-accessible data rather than fumbling down the previous year's paper trail.

My goal is to organize my finances and recordkeeping just enough but not too much. Just enough so I have the data I need, but not so much that I'm overwhelmed with unnecessary detail.

Doesn't that sound good? Want to join me?

Let's do this together. Let's talk about money systems. 

I want to hear about your just-enough-not-too-much approaches to finances. Examples:

  • filing: what to keep, what to shred
  • paying bills
  • tracking spending
  • budgeting (and whether you think it's necessary)
  • organizing tax records
  • tools you use (apps, web services, online bill pay, your check register, a notebook, etc.)
  • books you've found helpful
  • anything else you think is relevant to the "organize your money" conversation

Email your hacks to me at hacks@parenthacks.com with the subject line MONEY.

I'll gather the most useful hacks into a series I hope will help us all.

Thanks, everyone. I can't wait to hear your ideas. Today's the day to take a step toward more organized finances now and simpler taxes next year!

Your comments

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I'm looking forward to hearing the responses to this! Until a couple of years ago, I had used Quicken for about 20 years, for both tracking all of my upcoming expenses and past transactions, and Bill Pay until my Quicken database "corrupted" for the nth time. (I can't tell you how many times I re-entered all of my data in a new database by hand, only to have it corrupt mysteriously.) Anyway...

I don't need a lot of bells and whistles, and I don't even really need BillPay anymore, since I use the one through my credit union, but I'm having real trouble finding something to keep track of recurring expenses and my account activity without hand-entering it (I want to keep all of my accounts' data in one place, with Search and Sort capability). And I really don't want to use an online app to store my financial data.

I’m a professional organizer, former bookkeeper and current treasurer of the Oregon chapter of NAPO (National Assoc. of Professional Organizers). A lot of the issues you bring up are related to two things: 1. Setting up a system and 2. Making time to use that system. Here’s some ideas for you:

1. Use your taxes for 2012 as a guide for what to keep in 2013. Whatever papers you used in 2012 will also need to be used for 2013. If necessary to help you remember, go ahead and make some file folders with the labels of documents you know you will need to keep. Put them in your filing cabinet now (even though they might be empty for the time-being) so when that question of do-I-need-to-keep-this comes up, you can consult your filing cabinet for your answer.

2. For things you are not sure whether to keep, place them in a file folder labeled “Ask CPA.” Go to your calendar and make an appt with yourself in June and another one for December to email/call your CPA and ask him/her about the contents of that folder.

3. If you are using Quickbooks or some other bookkeeping program, your Chart of Accounts will be a good indicator of what to keep. In other words, if it’s a document related to something on your CofA, keep it!

4. When it comes to tracking expenses, I keep all of my receipts in an envelope near my mail filing system on my kitchen counter. Once a month, when I do all of my bookkeeping for reSPACEd, I enter those receipts in Quickbooks and then file them away in my filing cabinet.

5. I’m of the belief that everyone should track expenses and keep a budget, even if they aren’t self-employed. I find that when I don’t, it’s way too easy to nickel and dime myself on the little stuff (eg. coffee, clothes, home décor stuff) so I don’t have enough in my emergency savings for when big, unexpected expense comes up (eg. car repair, last minute out-of-state flight for a family emergency).

Hope that helps. And if you want more detailed info on how to set up a filing system, read my blog post about it here: http://respacedpdx.com/2011/12/filing-is-boring-but-at-least-it-can-look-pretty/ and my blog post on setting up a mail mgmt. system here: http://respacedpdx.com/2010/11/q-a-how-do-i-handle-my-mail-how-do-i-keep-it-from-piling-up/. Good luck, Asha! I look forward to reading the other tips your readers submit.

We use mint.com to keep tack of our spending, budgets and accounts. It is awesome because there is an app and my hubby and I can both log in and see how we are doing for the month. there are pie charts and bar graphs and my hubby just loves that stuff. We also have a talk every month about how we are doing. And we set savings goals and talk about everything before we spend. i think an open dialogue is half the battle.

I'm REALLY looking forward to this post. I struggle with managing my finances and worst of all keep a track of them all. I could really use some tips.

Kris, thank you for mentioning mint.com. I keep meaning to get that set up but it keeps slipping my mind. Just added it to my to-do list!

I use Excel, just to keep things simple: a single (password-protected and backed up!) file, with one tab for each separate account (checking, savings, 401k, etc.). Each tab looks essentially like a check register. When I close an account, I hide the tab but I don't delete it; that way I always have a record of it.

I also keep a separate tab (in the same file) for each credit card; and those also look like a check register. I enter EVERY receipt on the correct tab before I pitch it; so I always know how much the balance is on each card, without having to log in and check. Plus this lets me easily reconcile my records to the monthly bill before I pay it.

This is a pretty straight-forward money mgt system for someone who just wants to be organized but not overwhelmed by complicated tools. I am almost ready to move on to something like Quicken...but first I want to get the paper clutter in my office under control. I bought a Doxie scanner and am setting it up today. Baby steps!! :)

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