Does a disorganised pile of paper hold you back from succeeding financially?
It's not just cluttered paperwork that can stop you getting your finances in order. So too can:
- A cluttered mind that can't see the wood for the trees
- A cluttered portfolio
- Clutter in your office, which slows productivity
The holiday period is a great time to get started and turn over a new leaf when it comes to clutter. Finding a good system for organising paperwork isn't easy. The first thing is to get rid of old supermarket EFTPOS and credit card receipts you've checked against your statements, standard cover letters and annual reports – unless you really plan to re-read them.
For organising my paperwork I used to use A-Z expander wallets, but in the end they were so stuffed full of paper that I struggled to find what I wanted.
In recent years I've changed over to lever arch files and virtually everything from life insurance policies to utility bills and share certificates get filed logically.
It's a good idea to have an electronic record of all of your investments, which you can print out with ease. Many people use Microsoft Excel, Microsoft Money or Intuit Quicken for this purpose – thanks to its ability to add up columns. For historic reasons I use the portfolio tool on a UK website called Interactive Investor. The trouble with that is that NZ equities prices don't automatically update, only the UK ones. I have my NZ portfolio loaded into Yahoo! Money so that I can print it out once a year for Foreign Investment Fund calculations.
Doing regular printouts and keeping them with the paperwork makes sense. This could help your executors if you die suddenly as well.
Lots of people have too many accounts and investments - for emotional reasons not logical ones.
Having a few too many small investments scattered around the world is one of my failings. Many are historic – such as the British building society accounts I opened in the hope of getting a demutualisation windfall one day.
Conventional investment wisdom says if they haven't served you well, then it's time to cut, take a tax loss, and use the capital more effectively.
Fewer investments are easier to monitor – although it's always wise from a risk perspective to have your eggs in more than one basket.
Another reason to keep your paperwork in ship shape order is to avoid making overpayments, or failing to receive money you're entitled to. Once I was perusing my credit card statements and found that months earlier I'd been asked to pay twice in one week for childcare. No-one had picked up the mistake until then and I was $240 out of pocket.
Virtually all other bills I pay by direct debit, which is easy to follow and keeps my mind uncluttered. Some people prefer to pay bills as they're due and providing you have a system – such as an expander wallet with one pocket for each day of the month, then this won't clutter your house with bits of paper waiting to be paid or your mind.
A financial planner I interviewed recently said that for most regular investment portfolio holders a spread of between 10 and 15 investments is all that you need.
Cluttering isn't usually restricted to one part of a person's life. Interestingly at "clutterers meetings" in the US aimed at people who clutter their homes, about half of attendees had debt problems, I've read. So clutter and debt or at least not getting ahead financially may be linked. They lose bills and documents.
Finally, financial Feng Shui – or decluttering can give you more time and energy to spend on investing wisely or simply living life.
Have you got any tips for decluttering your paperwork and finances?