Organise your finances

 

January 14, 2013 by ‘Nimi Akinkugbe (nakinkugbe@punchng.com) 

Nimi Akinkugbe
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Organising your finances can be a real chore. Every month, you receive several bills, statements, and other financial documents, which can be quite overwhelming. Unpaid bills and statements from multiple bank accounts lying un-opened are a sure sign that you are losing control of your financial life. Perhaps you regularly miss payment deadlines and end up having to pay penalty fees or punitive interest because you just can’t keep up with all your financial matters. You could be putting your financial wellbeing at risk.

Just as you would attempt to de-clutter your home by throwing out all the things you no longer need, your finances need an overhaul from time to time. Ask yourself these questions; is your home insured? When is your health insurance policy due for renewal? What kind of policy do you have? When is your next rent due? Is the landlord willing to renew at the old rate?

Most of us badly need to go through this exercise, so this January, let us together go through all our financial matters and try to create some order. This might seem like a daunting task; where do you start, with envelopes, drawers, and cupboards full to the brim and overflowing with documents that you haven’t looked at for years. If you are disorganised, it will be difficult to make progress. If you put your mind to it and devote some time to this task, you will make huge strides in sorting things out.

What tools do you need?

To get started you need to put a few things in place; your purchase list could include the following items; files and folders, A4 envelopes, a letter opener, stapler, a perforator, markers, biros and pencils, address labels, a calculator, a shredder and a small safe.

Create a simple filing system

To put your documents in order you need to carefully create a system that helps you to keep track of all the paperwork; a simple filing system is one way as there is a lot of important financial information that needs to be organised and maintained, some of it in physical form for a period of time. The categories usually include the following documents; bank statements, retirement account, other investment statements, brokerage and mutual fund statements, portfolio reports, insurance policies including those for your home, life, medical and health insurance, title documents for your home and your car, mortgage documents, tax returns, monthly bills, salary pay slips, warranties, title documents for home, car, receipts for significant items and so on.

Sensitive documents

We all have some particularly important personal documents such as a passport, birth certificates, title documents, stock certificates, educational certificates or your marriage license; scan or photocopy these documents for your household files. Ideally, the original documents should be stored in a sturdy fireproof filing cabinet or a small fireproof safe. List all the contents and make copies to be kept with your lawyer or other reliable family member or friend. It is important to protect these from the risk of fire, flood or other disasters. You don’t need to go overboard in trying to create Fort Knox at home, but at the same time you shouldn’t have things lying around in cardboard boxes at the bottom of your wardrobe for an unscrupulous house keeper to rifle through whilst you are at work.

Regular maintenance

Setting up a basic filing system is one thing, but maintaining it is another. Even if you are too busy to go over your money matters once a week, do try to revisit this most important aspect of your life periodically. Whenever you receive a bank statement, take a moment to check it for errors before you put away in the correctly labelled folder; that way your bills and important documents are easily accessible.

Too many bank accounts?

How many bank accounts do you have and how many do you actually need and use regularly? If you have more than two bank accounts, you might consider closing down the ones you don’t really use unless the accounts play very specific roles.

Deal with bills promptly

If you receive a new bill, deal with it promptly. If you subscribe to internet banking, it will be easy to automate some of your regular utility bill payments. Otherwise write a cheque and send it off immediately. Do not procrastinate; start this task and finish it straightaway so that it takes only a few minutes of your time.

Shred!

Many Nigerians find themselves victims of fraud and identity theft, in which personal documents are stolen and the data is used fraudulently. Your financial information is very personal and it is essential that you maintain confidentiality to protect yourself from fraud. When your rubbish is picked up, you don’t know exactly where it ends up. Don’t just carelessly discard old financial statements; all those old bills, bank statements can become prime targets for thieves. Consider buying a shredder so that you can immediately shred any sensitive documents that you no longer need; this way you can minimise the chances of the wrong person getting at the information.

These are just suggestions; it is important to devise a system that works for you, otherwise you will not follow it through. Often we don’t appreciate the importance of keeping our finances organised until we are faced with a major financial decision such as buying a home, applying for a car loan or trying to claim on our insurance policy. Using technology to organise your finances will make things even quicker and easier.