Taming Your Financial Clutter

Financial clutter can be just as overwhelming as an overflowing closet. Unfortunately, because discussing finances is often seen as taboo, many people were never taught how to manage their finances in an organized and clutter-free way. Having clear financial systems is important because it empowers individuals to take control of their money.

Here are a few ways I recommend people declutter their financial lives.

Step 1: Gather Your Financial Documents
Start by collecting all your financial paperwork—bank statements, bills, receipts, insurance policies, and investment records. Designate a temporary “collection zone,” like a box or folder, to hold everything. Don’t worry about sorting yet; the goal is to have all documents in one place. If you’ve gone all or partially digital, create a single folder on your computer or cloud storage for PDFs, scanned receipts, and emailed statements. You may also choose to print out statements while you are working on getting organized.

Step 2: Categorize and Purge
Now’s the time to sort your documents into categories: bills to pay, stuff to file, tax-related statements, etc. When I do this, I like to clear a large section of the floor and make piles.

If there is a way to obtain a document online or by contacting the company, or if you already have a digital copy, toss as many papers as you can. Shred things with confidential information, such as banking documents or statements with full account numbers. According to the IRS, most tax documents should be kept for three to seven years, but check with your accountant or tax preparer to verify your specific requirements before shredding any tax documents. This decluttering process not only clears your space but also will bring awareness to some areas where you might be overspending. If you notice you are paying for a service or subscription you’re no longer using, cancel it now.

Step 3: Create a System That Works
Invest in a simple filing system, like a plastic file box or small filing cabinet. If you prefer digital, set up a couple of folders on your computer or use a digital app, such as Google Drive or Dropbox, to keep everything organized. When labeling files (digital or paper), use clear labels that will make retrieval easy. Simple categories such as “Utilities,” “Insurance,” or “Investments” will make it a breeze to find things later. For your digital files, you can include the category in the file name instead of making individual folders, as long as you commit to being consistent in naming your files [Setting Up A Digital File System — Fontaine Organizing]. Set up a recurring phone alert or calendar appointment to remind you to file anything new that comes in each week so that you don’t get overwhelmed again. As a bonus, in this step, you can set up automatic bill payments directly with companies or through your bank’s online bill pay center so that you don’t miss payments or have to manually pay your bills each month.

Step 4: Plan for the Future
Organized finances make it easier to set goals. Think about what you’d like your finances to look like in a year, in five years, and in retirement, and brainstorm what will have to be true to get there. It can be helpful to follow a plan such as the Ramsey Baby Steps to help you reach your goals.

No matter your goals, it’s wise to make a budget, which you can do by using a budgeting app, like EveryDollar, to keep track of your spending plans and cash flow. Making plans for your spending and knowing where your money is going will give you a sense of control and freedom from financial confusion. It will take about three months to get your budget working, so don’t give up if you miss things or go over budget at the beginning.

Financial organization isn’t just about neat folders; it’s about clarity, plans, and simple execution. Clients often report feeling more confident and less anxious once their finances are in order. Facing and tackling your financial clutter is an investment in your present and your future. Get started now, and in no time you’ll see how a little organization has a big impact on your bottom line.