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How to Organize Your Finances in Three Simple Steps

Pop quiz: Do you know how much cash you have in all of your bank accounts, right now? How long would you take to determine how much you spent on groceries and how much you contributed to your IRA last year?

Stumped? You might stand to learn how to organize your finances better. I know I could. Still, I don’t want to waste countless hours scrutinizing every receipt. I want to “set it and forget it”. I want a system that eliminates work and creates powerful peace-of-mind. So I created a plan to organize my finances in the simplest way I could devise; hopefully it helps you organize your finances, too. It comes down to three simple steps: Consolidate, Automate and Document.


Like the unused stuff in our closets, we tend to accumulate financial accounts over time. Sometimes there are good reasons: We can get a credit card with better terms or we move and open a new bank account. Before we know it, we have five credit cards and three checking accounts.

There’s nothing wrong with multiple accounts, in fact there are times multiple bank accounts are helpful. But extra accounts you don’t use create financial clutter. To help you de-clutter,I suggest you have no more than:

  • Two Bank Accounts – Keep one local checking account and an online high-rate savings account. (If you run a business or you’re married and want both joint and separate accounts, you may need one or two more accounts).
  • Two Credit Cards – I would only carry and use one credit card (if you want to use a credit card at all), but I advocate keeping two credit cards open both as protection in case your primary card cancels your account and for the health of your credit score. (If you’re self-employed or run a business, designate one card for tax-deductible expenses and try to put every business expense on that card).

A final note: Credit unions often make it easy to combine checking, savings and low-rate credit cards and loans under one roof. You may sacrifice some benefits like the highest savings rates and nationwide ATMs, but you’ll make up for it with simplicity, low loan rates and service.


With today’s technology, there are no excuses for not automating your finances. Every month, your checking account should automatically pay reoccurring bills (making forgotten payments and late fees a think of the past) and automatically contribute to your retirement savings and emergency fund. When you automate, remember two points:

  • Create a Buffer – The biggest excuse for not automating is “flying too close to the ground”—that is, not having enough money in your checking account to cover monthly bills. That’s dangerous, because banks charge overdraft fees that can be more than late fees. Here’s the solution: Save $500 to $1,000 in your checking account or a savings account your bank will draw from in the event of an overdraft. It’s overdraft protection, peace-of-mind and a mini emergency fund all in one.
  • Use Bill Pay When Possible – There are two ways to set up automatic payments: Instruct your bank to pay your bills at certain times using bill pay or authorize your billers to tap your bank account for funds. The end result is the same, but it’s the difference between you deciding to hand out money and you letting other people come in and take money from you in the night. Honestly, I use a combination of both, but I opt for bill-pay when I can because I can easily control all of my payments 24/7 in one place.


If you have eliminated your unused financial accounts and automated your bills and savings, I guarantee you won’t worry as much about your money. But there’s one last step to organizing your finances—document—and there are two reasons to do it:

  • Keeping Track – Studies show that high net-worth individuals are more likely to track the money they spend. Besides, it just makes good financial sense: Know what’s coming in, know what’s going out. Ideally, to the penny.
  • Taxes – We all have to keep records of our income for tax reasons and, if you itemize deductions or are self-employed, you’re going to need documentation for your deductions.

Again, thanks to technology, documenting your finances has never been easier. It doesn’t matter how you track your spending: You can use a program like Quicken, a free service like Mint or a simple free budget spreadsheet.

Finally, you can opt for paperless statements from your bank and credit cards and save your monthly statements to a designated folder. In addition, most credit cards offer a year-end summary of your charges. You may still need to save that odd paper receipt for tax purposes, but a simple well-laced folder should work for that!

What about you? What steps have you taken to simplify or organize your finances? Please share your strategies in a comment!

Published or updated on March 3, 2010

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Erill says:

    A very simple advice but very helpful. Thanks for sharing.

  2. David Weliver says:

    Thanks for the note, Andrea; duly noted. I’ve been focusing my efforts on the day job as well as some “big picture” projects for the blog and have been neglecting writing, especially more personal entries of late. I’ll try to get back to it!

  3. andrea says:

    I’m a big fan of your “organizing” entries. I like this one alot, my finances are in a quite similar structure. I do however miss some of the personal experiences of your blog that you used to write about

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