The first step in effective money management is to organize your personal financial documents. The category of “personal financial documents” includes a variety of materials, such as bank statements and paychecks. These documents tell you how much money you have.
Personal financial documents also include records that are not directly related to your day-to-day use of money. Automobile owner- ship titles, birth certificates, and tax forms are personal financial documents. Together, these records present a clear picture of your finances. Creating an organized system for handling your personal financial documents has several advantages. Most obviously, a system helps you quickly find any document you may need in a hurry. Organizing your documents also helps you:
- Plan and measure your financial progress.
- Handle routine money matters, such as paying bills on time.
- Determine how much money you will have now and in the future.
- Make effective decisions about how to save money.
You can keep your financial documents in different places—in a home file, in a safe-deposit box, or on a computer.