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Simplifying Your Financial Life.

There are so many good reasons for you to organize and simplify your financial life but the four big ones are: it eliminates clutter, saves time, reduces stress and could save you money by helping to avoid fees or paying more interest than you should. A good fifth reason is that simplifying your finances helps protect against identity theft. These few simple steps should get you on your way to simplifying your financial life and getting your money matters in order.

• Explore online banking – Just about every bank or credit union now offers online banking. This service allows you to monitor your deposits and withdrawals without waiting for your monthly statement to come in the mail. It allows you to view up-to-date balances and keep an eye out for suspicious activity. Getting in the habit of checking your online banking could save you money and help you budget better by making sure that you don’t overdraft your account.

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• Ask to have your pay directly deposited into your account. Whether it is a salary from your job, a pension or Social Security benefit, or a dividend disbursement, ask to have your money direct deposited. This is safer and easier than getting a paper check that could get lost or stolen. It also is more convenient than having to make a special trip to the bank to deposit the paper check. In many cases, direct deposit gives you have access to your funds sooner than with a paper check. Be aware that if you receive Social Security or other federal benefits, starting March 2013, the payments will only be issued electronically so be sure to get that service set up.

• Have some savings automatically deposited into a separate account from where you pay your bills. If you use direct deposit, you can usually divide up the amount of the deposit and have some of it deposited into a separate account. Try to not touch this savings account unless it is an emergency. By having the money directly deposited into another account and not relying on that income, it makes it easier to build an emergency fund or save for the future.

• Set up your recurring bills for automatic withdrawal. By setting up an automatic withdrawal from your checking account, you won’t forget a bill and have to pay a late fee. Be sure to record the charges in your checkbook and always be sure that the funds being withdrawn are available. Many banking institutions also have a “bill pay” service that allows you to list all of your monthly bills and pay them online. Be sure to ask your banking institution how the process works and know when to schedule the payments so they arrive on time and you avoid late fees.

• Keep the number of accounts to a minimum. In other words, if you don’t need 7 credit cards then don’t keep 7 credit cards open. Simplify your finances by keeping the smallest number of accounts you can. This will help you keep better track of your funds and expenditures as well as help minimize your risk of identity theft or fraud. If you are thinking of consolidating all of your accounts to one institution, be sure that your combined funds to do not exceed the FDIC or NCUA’s deposit insurance limitations. If you have questions about the limits, just ask a customer service representative at your institution and he or she should be able to provide you with clear answers.

• Create or update your will and other legal documents. Many times people create a will or legal document for a specific purpose (like travelling overseas) and then do not keep the document current. Keeping these documents current will allow you to “rest easier” knowing that your financial affairs are in order. Check to make sure that the information for beneficiaries is up-to-date and tell your family, attorney or close friend where to locate important legal documents should something happen to you and you are unable to provide the information. Consider having a “durable power of attorney” that would enable someone else to handle your finances or other personal matters should you become incapacitated. Be careful who you choose as many people have been scammed by someone they trusted.

• Get organized. Using online services such as bill pay and direct deposit should decrease the amount of physical paperwork you need to keep track of. However, you should still designate one place to gather all of your bills and finances. For example, start with a filing system in your home for all of your bank, tax, insurance and other financial information. If you choose to store everything digitally and not keep any paperwork, be sure to have a good back-up service to protect your “files” should something happen to your computer or home. Safety deposit boxes are great options for certain papers or items that would be impossible to replace.

• Be prepared. Should an emergency strike and you only have a few moments to evacuate your home, perhaps for an extended period of time or even forever, be sure that you would have all of the documentation you need to gain access to cash, your bank accounts or your personal identification. Birth certificates, drivers’ licenses, social security cards, health insurance information, credit card account numbers, and phone numbers, etc. should all be easily accessible so you can just grab and go in a time of emergency. Again, if you prefer using digital copies, scan your birth certificate and other documents and keep them in a secure file stored somewhere other than just on your computer. Many companies offer secure online back-up or storage services that would allow to you access your files from anywhere should you have to leave your home quickly or not be able to access your home due to a natural disaster.

By taking time now to get your financial life organized, you could save yourself many hours and possibly a lot of money later on. There are many ways and products out there to help you simplify and get organized so find that one that works for you and then be consistent with it. The result is worth the time spent.

Joanna Murphy is Certified in Bankruptcy and is a Certified Financial Counselor by the Credit Union National Association. Her company, New England Credit Consultants is the ONLY licensed and bonded credit repair agency in the State of Maine. For more information about NECC and to read other articles about Financial Fitness, please visit