February 1, 2017
Time to Get Your Finances Organized?
Each year the second most searched N ew Year's resolution on Google is: Get Organized. (Over 33 million searches this year!) This is a hot topic and one that needs to be done right. For encouragement and advice about financial organization, read on.

The root causes of financial dis-organization usually contain one or both of the following:
  • Acute dissatisfaction with your current financial condition. 
  • Confusion about how to manage finances and make good financial moves. 
Truth be told, fixing a financial mess is much more about attitude than skill or technique.  When finances are a mess, it's understandable to avoid the numbers. But avoiding your situation will not help your peace of mind. Instead, focus on  getting organized  rather than the dismal state of your current situation. You'll only be able to make good financial moves that align with your priorities  after  you're organized anyway.  

Eat that Elephant One Bite at a Time

Changing your attitude is the first move toward financial organization. Yes, you can be proud of yourself simply by clearing the fog surrounding your finances. Set some  small  goals this year to know precisely where you stand financially. Small goals are like small bites: quick and easy to do.  With a string of small successes you'll have that elephant devoured sooner than you think.

Getting in shape in 15 minutes a week

Thanks to the digitization of nearly all things financial, the time it takes to manage your finances should be about the same amount of time each week as you spend brushing your teeth. Call it 15 minutes. Everyone can prioritize 15 minutes a week! And like brushing your teeth, make the weekly financial review a habit. Here's how:
  1. Figure out what you have (and what you owe) and where it is. You will receive tax documents in January and February, which is a good place to start. Collect your tax documents as well as any current statements you have received, and list all of your assets and liabilities (your balance sheet) in one place. Making a list will allow you to see everything that makes up your financial picture.  
  2. Simplify your accounts. Now that you know everything you have (see step #1), it's time to simplify! Simplicity is your #1 goal in financial organization.  Have one bank account, one brokerage account, and one credit card account. Sure, it's tempting to open new accounts to take advantage of bonus offers, but resist the temptation until you're more secure in your financial organization and financial health.
    • Bank.  Use one bank for your checking and savings accounts. (You can create savings sub-accounts as you craft savings goals.) Having all accounts at one bank will allow for easy money transfers between accounts.
    • Brokerage account. Choose a brokerage firm (e.g. Schwab, Fidelity, Vanguard) and have all your accounts moved there. If you have multiple retirement accounts from old employers (a very common occurrence), consolidate all into one Rollover IRA account.
    • Credit Card. Consolidate all your credit cards into one with no annual fee and with a cash back program. Your goal is to pay that account off, in full, every month.  Having a primary spending card will allow you to track what you spend with ease.  
3. Go digital.  This is essential for simplicity, speed, and accuracy. Here's how:

     Start with a password manager.   (For us, this is non-negotiable.  It's a must for privacy and ease.)  We use password managers like Dashlane and LastPass. Using a password manager gives you the ability to have separate logins and passwords for all your online activity. Not only does it give you better security and easy access to your accounts, you'll feel liberated by only having to remember one master password!  

□     Swipe versus  paying cash or writing checks.  Every time you use your card for a transaction a digital money trail develops.  Transactions are easier to monitor and categorize.  Let software track your spending (see below) and spend a lot less time balancing that checkbook.

     Use aggregation software.   Aggregation services like Mint.com are free and allow you to link all of your accounts to one site. Your entire financial position is in one place and updated every night.  Automation makes the process painless.  You'll know your net worth, cash flow, and debt level as soon as you login; no calculating required.

Wow, that wasn't bad. Now what?

When you get organization right, the amount of time it takes to manage your finances should take about 15 minutes per week. We s et a regular time each week to review our own finances. During the review, we login to our aggregation software, check transactions, and pay bills that are coming due. Admittedly, we've been organized for quite some time, so we use the rest of our weekly check up time to improve our financial health, like reviewing our budgets and crafting and implementing savings goals. Once you are organized, you'll be ready for some of these more fun aspects of financial growth!

Let's Review.

Worry about your financial situation is not an excuse to be disorganized. Becoming organized does not require special skills and it isn't terribly time consuming. (The most time consuming part of it all is consolidating accounts and moving them to one bank and/or brokerage firm.) So, start now! Figure out what you have, simplify your accounts, and move everything online (using strong passwords). Then, you'll experience the joy of achieving financial organization.  

CELEBRATE being organized!  It's an important first step to put you on the right path financially and emotionally.  

Once you have achieved your "Get financially organized" New Year's resolution, you'll be able to build priorities and goals that give you financial margin in your life - where you are  comfortably spending less than you earn. It's that margin - both with your finances and with your time - that allows for a life of happiness, generosity, and low stress. But remember, that isn't your real goal today. Instead, enjoy the small steps you take toward having a clean, simple, organized financial life!

The CAVU Team
David Sylvester, CFA, CFP®                                 
Founding Principal    

Nick Foy, CFP® 
Portfolio Manager             

Hilary Disher, CPA (non-active)
Tax Strategist
Plan well.  Invest Wisely.  Live Richly.
CAVU Wealth Advisors LLC