Managing your finances electronically…

May 27, 2014 | Filed under: Personal Finance | Author: Editor

One of the biggest pitfalls in personal finances is being disorganized. Have you ever thought of organizing your finances electronically? If you are comfortable with technology, and are fortunate enough to have access to it, one of the easiest ways to maintain your records, is to use technology and personal finance software.

 Advances is personal finance software have made it possible for anyone with a computer and regular internet access to create budgets, pay routine bills, manage bank accounts, track every day finances, and monitor their investments. Assuming you have already registered with your bank’s electronic banking facility and most of your regular transactions are handled electronically, you can take things even further. Microsoft’s Money and Quicken are just two of the more popular solutions.

 Perhaps the hardest part of organizing anything, including your finances, is getting started. Take the trouble to learn the basics of your software by completing any on line tutorials. If you do not make an effort at the onset, the experience will be tedious, which defeats the whole purpose of the exercise. It can be a daunting task to set up all the relevant accounts, extract information and then input it on your personal finance software. We often have far too many accounts that we don’t need so this might be a good time to streamline your accounts. Start with your current account, and then set up accounts for your loans and investment accounts.

 Most personal finance programs can be downloaded from the company’s website and are relatively easy to use, even for those who are not technology savvy. As the leading software is usually compatible with the more common banking platforms, with the click of a mouse, you should be able to download your bank account and investment information directly which makes it much easier for you to reconcile your accounts. No matter how companies try to simplify the process, however, you cannot avoid having to input some account information manually.

 Personal finance software can be a great tool for financial planning. You can print out reports that will help you analyze your income and expenses, and spending categories are often in place so that you can at a glance determine where your money is going. Most programs include a budgeting tool, which even helps you track how well you are sticking to your budget. 

Scan your documents. Are you swamped by paper? Paperwork consumes our offices and homes and our lives. All those paper bills and statements tend to pile up, and they need to be stored somewhere. One of the best ways to store and backup your data is to scan your critical personal and financial documents. Invest in a document scanner. By scanning many of your sensitive documents and storing them on line or at least on a hard drive you can reclaim some of your space. Many smart phones have applications that you can use to “scan” documents using the integrated camera; some of these produce very good digital mages. An electronic version will protect from fire, theft or other loss, is easily accessible and will also be legible long after ink has faded. It doesn’t take up any space, except on your computer hard drive or your flash drive.

 Once you have made an electronic copy of the documents you wish to store, you will be more confident shredding the documents that you don’t need to keep to reduce the clutter. There are always critical financial documents that must be retained all your life in their original form for verification purposes; these include birth certificates, passports, insurance policies, title documents; these should be kept securely in a secure fire proof cabinet or safe but it is useful to retain scanned copies of these documents as well. 

Don’t forget to back up regularly. It is not advisable to maintain your most sensitive financial documents on your personal computer or laptop, as saving all your data locally leaves you vulnerable to corrupt files and data loss, which can be very difficult or often impossible to retrieve. Even worse, as if you lose the device or it is stolen, hackers may gain access to your sensitive information and use it fraudulently. Store your documents on a removable USB storage device or on a CD as additional back up. It is a good idea to back up your hard drive and keep a copy of your data off site in a different location from your computer as an additional precaution.

 Avoid a backlog. Once you are organized, try to take some time if possible, weekly, or at least monthly or at least quarterly in order to scan, file and shred documents. If you allow the documents to accumulate beyond this, it can become overwhelming. When you manage the process in smaller chunks you are less likely to become discouraged and leave things to pile up.

 Most people have challenges making the transition from paper to technology. Over time, paper accumulates and can become a major organizational problem. By migrating from paper to electronic document storage you can save both time and space. Once you start organizing your finances electronically, you will wonder how you ever coped without technology, and an added bonus is that it is good for the environment.