5 Reasons You Should Organize Your Financial Information

We all know how much work it can be to maintain our physical health. Watching what you eat, finding the time to exercise, and creating a workout routine — it can all feel a little overwhelming at first. However, getting organized, planning out meals, finding a fitness coach or nutritionist, and setting goals can help keep you on track and stick with it. When approaching your finances, having a similar mentality can allow you to make better financial decisions and increase your financial fitness. Proper financial fitness is understanding each aspect of your finances, knowing where your assets are located, and finding a team to help you develop and manage your financial plan to optimally meet the goals you’ve set forth.

Ready to get organized? Here are 5 reasons you should dig out the files, collect your loose papers, and organize your financial information.

1. You gain a comprehensive view of your financial situation.

You don't know what you don't know. Organizing your financial information gives you a full understanding of your finances, especially if you're not the only one contributing to (or spending from) them. Gathering up your family's credit card statements, investment accounts, saving and bank statements, loans, and more ensures that you know where and how much money is being allocated. 

2. It allows you to make better spending decisions.

Financial wellness starts with spending less than the income that’s brought in and paying yourself first by saving upfront. Having a comprehensive view of your finances will allow you to review your budget, making sure you're not living above your means. This stage is also a great time to meet with your financial advisor. Having a specialist review your finances and help you maximize your income and investments will help you allocate your income to the proper places and make strategic spending decisions. 

3. It will help you get out of debt faster.

We all know how easy it is to swipe that credit card. It's just money, right? You can pay it off later. But before you know it, that credit card bill has more zeros behind it than you expected. Between credit cards, mortgages, car loans, and more, the average American household is $59,580 in debt, according to the Federal Reserve Bank of New York's Household Debt and Credit report 2022 Q4. Understanding how much debt you have can allow you to come up with a strategy to pay down debt faster and more efficiently. 

4. It sets you up to accomplish your long-term goals.

Now that you have a comprehensive view of your finances, you can determine which long-term goals you want to invest in. Whether it's retirement, buying a house, or saving for your child's college fund,  a financial planner can help you maximize your savings and investments, and keep your path that aligns with your future goals and dreams. Your financial planner and team are there to help you every step of the way, helping you improve your financial fitness, become financially independent, and achieve your dreams. 

5.  It helps you to plan better for your and your family's future. 

We constantly manage risk from ongoing life events. If not kept in check, some of these risks can be devastating to one’s finances and goals. These could be in the form of insurance risks, market risks, or health risks. Your financial team can provide you with the tools necessary to keep these risks at bay and be proactive on your behalf to minimize risks to your financial portfolio. 

When it comes to your finances, organizing your financial assets, determining your long-term strategy, and cultivating a knowledgeable and experienced financial team can give you stability and confidence. Ready to dive in and organize? Before you do, download our free Financial Fitness Checklist to do a self-evaluation of your financial fitness level! Click the button below. 

Derek M. Oxford | CFP®, AEP®
Financial Advisor