Finances & Money

The 7 R’s for Organizing Your Finances This Year

by Tom

Getting your finances into shape this year is a great goal, but one that is often easier contemplated than completed. Still, finding ways to get and stay organized is pertinent to maintaining and sustaining your financial well-being. If you are having trouble making the leap into getting yourself organized and up to date this year, consider the seven R’s of organizing your finances. These steps may help lead you in the right direction when it comes to keeping track of your money and make the prospects of getting organized appear less daunting.

1. Regroup

Your personal finances may have taken quite a hit in the recent recession and may still be struggling to recover when it comes to recouping the losses you’ve sustained. While contemplating a full recovery anytime soon might be hard to do, it’s time to try and put away the negativity that came with those huge hits to your finances, regroup, and focus on the future, not the past. Start the regrouping phase of the seven R’s by compiling your financial documentation. Gathering as much relevant and recent information as possible will make completing the other steps in the financial organization process easier and less time consuming.

2. Review

Once you have regrouped and gathered your financial information, it’s time to sit down and review what you have. Outstanding debt, tax returns, pay stubs, receipts, income streams, real estate, lists of bills and expenses, stock investments, retirement accounts — it’s all fair game when it comes to the second phase of the seven R’s — review. Spend some time reviewing and making sense of all this information. It is critical to organizing your finances that you first understand what they are, and what they mean before you can proceed to organize them with confidence.

3. Revision

Once you have reviewed and understand your finances, it’s time for the third R — revision. Consider the current economic climate and decide if your finances are allocated in a way that makes you comfortable. Are you taking too much risk? Are you taking too little? Do you have too much money tied up in one area? These are the types of questions you should consider when revising your finances.

4. Restructure

With the first three R’s under your belt, it’s probably time for a little restructuring. Not only might this step include developing a spreadsheet or utilizing a similar tracking tool to better follow your finances, utilizing a budget, or creating a filing system, but it might also involve reallocating some of your investments, paying down debt, consolidating credit cards, or changing investment options. Restructuring your finances so that they are easier to understand and follow can make a huge difference in the amount of time and effort you spend dealing with them in the future.

5. Renewal

As you restructure your finances, you might find there are certain areas that you have neglected. With the fifth R in the list, renewal, you can activate areas of your personal finances that might be slipping or slumping. Investments that aren’t performing as you might like, savings bonds that may have matured, or a wad of cash sitting in your savings account earning you next to nothing, are just a few of the financial areas you might find yourself having to renew.

6. Reduction

By this point in the organization process, you may already have been accomplishing the sixth R. Reduction of old paperwork, unused spreadsheets, financial statements, and other odds and ends relating to your personal finances, is a great way to get organized and de-clutter your financial life. The process of reduction can also make staying organized moving forward easier and less time consuming.

7. Revitalization

Once you’ve reached this point in the seven R organization process, you’ll hopefully be feeling re-energized and revitalized. With your finances organized and easier to deal with, you may feel more motivated to work with and track your financial position. When updating investment progress or the status of various accounts takes minutes rather than hours of sifting through statements and paperwork, it may not be viewed as such as chore. This feeling may reinvigorate the efforts you put toward your personal finances and hopefully make watching your money fun again.

Tom is serious about personal finance and writes about managing money at where people can make their savings work harder.

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