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:

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?