Making Your Money Matter - setting up your financial binders

Setting Up Your Two Must-Have Financial Binders

Setting up a annual budgeting binder and a personal financial plan binder.

If you’re just stopping by for the first time, this is the part of organizing binders up for a series of classes over the next few months which will culminate in the development of a complete financial plan.  Stop by the orientation class HERE first for class orientation/overviews and HERE for more information about the website.

I have a strange love of buying office supplies.  Maybe it’s all the time I spent in a small cubicle desk job as a CPA, or maybe I’m just odd.  Maybe both(!), but the first step I took in setting up my financial plan was to buy a pretty binder to organize everything.  Whether you have a couple of old binders you’ve re-purposed or new shiny ones, it’s time to get them ready!  Yesterday, we talked about the supplies needed before our financial plan classes start.  With those ready, let’s get started.

#1-FINANCIAL PLAN BINDER

This first binder will be the new home of your entire financial plan.  Each class (if you’re new here, check them out here) will add another important part of your financial plan and you will now have a nice organized place forever more where you can go to find all of this information at your fingertips.  In the past, I’ve done financial calculators all over the web and when I need to find the information again, figure out the assumptions I’ve made or update for my current situation, it’s been impossible not to mention frustrating.  What’s not frustrating are editable, awesome excel files and pretty organized binders.  Right?  Without further ado, this is how you will set up the set of 8 main tabs in your “Financial Plan” binder:

  • COVER-download from the Orientation page
  • TAB 1-Financial Goals
  • TAB 2-Personal Financial Statements
  • TAB 3-Debt Management
  • TAB 4-Insurance
  • TAB 5-Taxes
  • TAB 6-Savings & Investments
  • TAB 7-Retirement & Estate Planning
  • TAB 8-Special Situations

Here’s a picture of the tabs on my financial binder-you can see the main tabs and few of the other tabs here:

Making Your Money Matter - Setting up a personal financial plan binder (goals, financial statements, debt mgmt, insurance, taxes, saving/investments, estate planning, other)

In Tab 3-Debt Management you will want to use additional dividers or post-it tabs and cover pages to set up a category for each outstanding debt you have, so for example:

  • Credit Card-#1
  • Credit Card-#2
  • Credit Card-#3
  • Auto Loan-#1
  • Auto Loan-#2
  • Student Loan
  • Mortgage
  • Home Equity Loan/Line of Credit

In Tab 4-Insurance, set up the following categories, depending on your personal situation:

  • Automobile Insurance
  • Homeowner’s or Renter’s Insurance
  • Medical Insurance
  • Life Insurance
  • Disability & Long-Term Care Insurance
  • Personal Liability Umbrella Insurance

In Tab 5-Taxes (I cant wait to talk about taxes!)-set up the following categories:

  • Prior Year Income Taxes
  • Current Year Income Taxes
  • Next Year Income Taxes
  • Payroll/Withholding Taxes
  • Property Taxes

In Tab 6-Savings & Investments, you will want to set up an account for each account (or set of related accounts) you have or plan to set up during the year.  Don’t include retirement accounts here as they will go in the next tab.  For example:

  • Joint Checking Account
  • Joint Savings Account
  • Money Market Account
  • College Savings Accounts
  • Brokerage Account-#1
  • Brokerage Account-#2
  • Health Savings Account (HSA) or Flexible Spending Account (FSA)

In Tab 7-Retirement & Estate Planning, set it up similar to the following to match your current retirement accounts and estate planning documents:

  • Retirement Account (401(k), IRA, Roth, etc)-#1
  • Retirement Account (401(k), IRA, Roth, etc)-#2
  • Social Security #1
  • Social Security #2
  • Living Will
  • Trust

And last, in Tab 8-Special Situations, add the following tabs/dividers to match your situations you currently or will soon have in your financial plan:

  • Home Purchase Analysis
  • Home Sale Analysis
  • Auto Purchase/Lease Analysis
  • Other Employment Benefits

You may have noticed what is missing here-the budget.  And that, my friend, is because we have another binder to set up!  So, let’s move on shall we?

#2-ANNUAL BUDGETING BINDER

This binder will (not should, but will right?) be well-used, so make sure to choose a sturdy binder for this one.  You’re going to use it like every day (yes?)…or at least every week.  This one will be simple to set up and keep organized throughout the year as long as you stay up on your finances regularly.  I just want to reiterate that it is SO important to keep up on updating your finances on a weekly basis!

Start by adding your folder for incoming bills to the front of the binder, with the Jan-Dec tabs right behind.  When bills come in, you’ll put them inside the pocket in order of due date, with the earliest due date at the front of the pocket.  This way, you’ll easily be able to see which bills are coming due for the next week when you sit down for your weekly financial planning/bill paying/budgeting/session.  After they’re paid, file them behind the correct month right away so everything stays organized.  I personally have every single one of my bills possible enrolled in auto payment, but I still use this method to make sure I have money in my checking account to cover the week’s bills so I don’t get an overdraft charge for the bank automatically moving money from my savings for me (why is there even this charge?-makes me so mad!) and also to make sure I don’t miss deadlines on other non-regular bills such as medical payments or one-time expenses.

I suggest organizing each month in this order, or something similar and consistent so that you can find them easily:

Example: “January” tab

  • Budget for the month (print out a preliminary one at the beginning of the month for reference, then replace with actual vs. budget at the end of the month)
  • Expense Tracker (list of all day-to-day expenses)
  • Income
    • Paycheck statement(s)
    • Self-employment income (print out monthly income statement if self-employed)
    • Other income
  • Expenses
    • Mortgage bill
    • Auto loan bill(s)
    • Auto insurance bill
    • Student loan bill(s)
    • Credit card bill(s)
    • Utility bills
    • Mobile phone bills
    • Cable/internet service bill
    • Charitable receipts
    • Other bills
  • Other Monthly Statements
    • Bank statements
    • Retirement plan statements
    • College saving plan statements
    • Other statements

I suggest jotting down the order in which you’d like to keep your bills and slipping it into the front pocket of your binder.  If you are self-employed or have rental properties, they should be tracked totally separately (totals can be included in budget amounts of course).  Also, I keep my monthly receipts for 3 months and then toss them-I don’t even bother with keeping them organized except for items with warranties, items that may need to be returned and items related to taxes.  Those items I keep filed with the manuals and scan a copy of the receipt to a file on my computer.

Next, we’ll go over creating a paperless system.  At the least you should have a backup system for your financial plan documents, but many of you may want to organize your entire financial plan and budget electronically.

Are you ready to set up your binders?

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11 Responses

  1. I’ve just recently stumbled on your blog and have been reading some of your posts. Do you still recommend creating physical financial binders? I’m a mix of paper and paperless at this point. I am computer savvy, but NOT money savvy! We are due to get a bonus and a sizable tax refund, and I *need* to get better about our personal finances. I feel like so much of it just sifts through our fingers. I have used Quicken for years and mostly keep it up to date, although not weekly. I go in spurts with it. Our bank is a small credit union and does not allow us to link accounts, so I still have to manually enter transactions.

    You have a plethora of resources on your website, and I plan to continue reading, but I’ve never created a physical binder and wondered if it was worth the trouble.

    Also, I have been reading your medical insurance post. We have always been covered by my husband’s employer – good coverage – and we have 8 healthy kids with no chronic conditions. So we were unprepared in every possible way for our nearly losing our youngest (3yo at the time) in August 2014 to a near-fatal asthma attack and bacterial pneumonia. That was the first sign he had asthma – it did not run in our family, so I had no reason to suspect anything. He was lifelined to a children’s hospital in respiratory distress and spent 9 days in PICU. The helicopter ride was $32,000! (And since our insurance deemed it “medically necessary,” yes it was covered.) When the dust settled, hospital bills totaled $250,000. So, all that to say that you are very smart to be prepared, even though your kids are healthy. You never know.

    1. That last paragraph should’ve read “*But* we were unprepared in every *other*possible way.

    2. I think the ideal is to have a completely paperless system for both your day-to-day budgeting system and your financial planning. I’ve switched 100% since writing that post.

      If you haven’t checked out YNAB, that’s a good place to start. It’s ideal to manually input your expenses in YNAB and they recently updated their app, which I now love. They have a free trial, so you can check it out first (if you’re interested in checking it out, I have a directory of my YNAB posts at makingyourmoneymatter.com/YNAB). I know what you mean about the money just sitting through your fingers. It happens to us all :). Another thing you could consider is transferring a portion of that money to an online savings account (like Ally or Synchrony). You can still ACH transfer money for free between the accounts, but it keeps it separated and less accessible to you may be less tempted to spend it.

      I’m glad that you had good insurance coverage so the experience didn’t ruin you financially (and I hope he’s totally okay now!). One of the things I’ve done and recommend to anyone I help with their finances is to set up an HSA (if why’re eligible) with at least their deductible amount and ideally their max out of pocket amount. Those situations are stressful enough without having the financial concerns!

      1. Thanks, I am checking out your YNAB posts now. Never heard of it, but it sounds promising.

        Our son is totally fine now. He is on daily controller meds for asthma and he’s only had 2 asthma attacks in 3.5 years. He’s a small but mighty 7yo and our “family ambassador” because he’s so outgoing. 😉

        Thanks for your time. 🙂

  2. I stumble up on your blog and too have had difficulty managing my finances. All of the blogs I come across explains weekly budgeting, but for me I am on a monthly budget so unexpected and late payments are hard to come up from under. Do you have any suggestions on how to get ahead, save and prepare for unexpected expenses.

  3. I just found your financial planning class and am so grateful! It is so helpful to have everything broken out step by step, and having pre-made excel templates and binders is great (one less procrastination excuse!) I may just get myself organized and oriented, finally, with your help. Thank you!

  4. Is your website still active? Lots of promising stuff here but I see the two questions above are old and have not been answered.

    1. Thanks for stopping by! It’s been a crazy past year (we moved abroad to China) and I haven’t had as much time to dedicate to this blog as I would have liked! My website is still active, I’m just not able to post as regularly as in the past.

  5. I don’t usually leave comments on blog posts but I am LOVING this blog, you are 100% speaking my language and I can’t wait to read EVERY post! Please keep up the good work here because I too am an organizing/numbers nerd and can’t get enough of everything I’m reading here – nice work!!

    1. That’s so kind of you Laura! I don’t have time to post very frequently, but if you have any suggestions of things you’d like to see that you haven’t yet, let me know!

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