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Organizing Your Finances Can Help Your Budget and Your FICO® Scores

, by Rob Kaufman

Think about the last time you organized your closet, your car or even your computer. Remember how much easier it was to find the items you needed? It didn't take long for you to realize that a little time spent organizing helped save hours of time and energy.

The same goes for organizing your finances. The only difference is, you'll not only save time and effort, but you can also save money.

5 steps to organizing your finances

  1. Manage Your Paperwork. Having to sort through stacks of unnecessary bills, receipts and other forms to find the one thing you need is a waste of time. Shred the papers you don't need so that you can quickly find the desired information.
  • Credit card receipts . Unless required for tax, warranty or insurance purposes, you can get rid of them once you receive your statement.

  • Monthly credit card/bank statements . If you're still receiving paper statements from your bank or credit card company, keep only the most recent copies to avoid clutter and potential reconciliation errors. Most banks keep this information online, so if possible, switch to paperless statements.

  • Monthly investment account statements . Unless you need these to keep track of trades, you can shred these, too. As with credit card and bank statements, your investment company most likely keeps all transactions online. So check with them to see if you can switch to paperless communication of your statements.

  • Paid bills/ATM receipts. Unless required for tax, warranty or insurance purposes, these only add to a stack of documents you don't need. Try to get rid of the ones you don't need.

Just clearing out these documents should help you find the information you need faster and with less frustration.

2. Create a Budget. To best organize your finances, you need to know where your money is going. How much is coming in and how much is going out? What are your secured expenses (i.e., mortgage or car payment), unsecured expenses (i.e., credit cards, gas cards, retail cards, etc.) and monthly variable costs (i.e., clothing, food, utilities, insurance, etc.)

You can choose to use pen and paper, spreadsheet or purchase a software application to help you create a budget and determine ways to spend (and save) your money more efficiently.

Having a budget is also a great way to help increase your FICO® Scores. By paying bills on time, you should be able keep your payment history on track and amounts owed within an acceptable range.

Remember to also add "savings" into your budget. That means, when you categorize and chart out your earnings and expenses, add a "savings" column to your chart. Think of savings as just another monthly expense to which you must allocate a portion of your income. You can use myFICO calculators to help!

3. Organize Online Passwords. Logging in to online accounts can be quite a hassle if you don't have every one of your user names and passwords engrained into your memory.

There are password management services that store encrypted passwords so that you only need to remember one password for all of your accounts. Some are free, others cost money, but having a service like this can be a big time-saver (and frustration-reducer) when you need to enter a password at a moment's notice.

4. Tidy Up Your Wallet/Purse. How many credit and debit cards do you carry with you? The fewer you have, the more aware you'll be of how you're using your credit and where your money is going. You can keep the cards you rarely use in a secure location in case you need them. Note: don't close the unused card accounts unless it's absolutely necessary. Closing accounts may negatively impact your credit score.

5. Focus on Apps and Utilities. Sometimes we purchase phone apps, forget about them, but still pay recurring charges. Check your apps and decide which ones you can delete from your phone - and your bill. Are you paying for cable company DVR boxes you rarely use... or channels you never watch? Check with your cable/Internet provider and start negotiating. Does your electric company allow you to choose your own electric supplier? If so, check around for the best rates and terms and save some money each month. Do you have a landline phone you never use? It might be time to let it go, along with the additional cost.

This is the time to look closely at your monthly bills to see where you can cut, or at least cut-down, so that there's no need to feel overwhelmed when it comes to your finances.

As you probably already know, the more organized you are, the more in control you feel. And being in control of your finances not only makes for a better financial future, it can also help put you in better control over the impact you have on your FICO® Scores.

At myFICO forums , you can read about the different ways people organize their finances. Learn something new or share your own ideas!

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.