Hoard? No, heave!

Photo: Contributed - Thomas Northcut

While walking my dog early this weekend, I was once again surprised by the number of people who either can’t, or choose not to, park their cars inside the garage. The average house for a family of four in 1950 was 983 square feet. Today we’re closer to 2000 square feet but not much has changed. Who remembers the collection of encyclopedias on the family bookshelf? One might think that with all the digital storage available to us that we would need less room. 

The culprit: Too much of everything

We’ve become a society of collectors and hoarders. I’m not sure whether we’re afraid to get rid of things, or we don’t understand relative value anymore, or it’s just easier to toss something into the garage or basement and forget about it, but whatever the reason, we are hoarding.

I’m not a psychologist, but I do know (from personal experience) that this growing collection of miscellaneous stuff ramps up our stress levels simply by being there. We don’t know what or where it all is. 

If you’re looking to do a complete overhaul, a great book on getting it done right is The Life-Changing Magic of Tidying Up (the Japanese art of decluttering and organizing) by Marie Kondo.

Getting back to the financial world

When you’re against a deadline, there’s nothing that creates stress faster than having no idea where your documents and details are. 

Think about tax time. For an organized, logical person, it’s simply a matter of retrieving the information from where it is stored and getting on with the job. For the rest of us, everything is in shoeboxes or banker’s boxes full of random papers. We freak out, then get down to the tedious job of putting it into some order so that either we, or our accountants, can make sense of it. 

A lack of organization is a lack of control 

For many of us in this cyber-driven, fast paced, information infused, digital world, hanging onto a small sense of control can help keep the stress monsters away.

Be Zen for a moment. Let’s start with the things we can control. In the financial world it’s information. The easier the access to the bits of paper and files we need, the better we’re able to control that part of our world. The best way to do that is to put things in order.

We each have our own ideas of what being organized feels like. There is nothing like clutter to bring on confusion and dread. “Where are the accounts located?” “Did I pay the bill?” “When is it due?” “Did I make an RRSP contribution last year?” “How much was it?” “If I can’t find the receipt, how will I know?” 

To the Great Unorganized this generally creates one of two responses, denial or overkill. Some just ignore the realities and hope for the best. This is not the ideal approach, as things get missed and soon start to compound. The other response is to keep absolutely everything related to your financial world in a big box, then when you need it you dig through in the hopes of finding that one receipt. While this approach may be better than denial, it won’t bring you much piece of mind either.

So, what’s the best way to organize your finances?

First step is to know what you’re talking about when you say ‘finances’. Get it all out on the table: Bank statements, investment statements, bills, mortgage statements, transaction confirmations, and receipts, then organize it into logical piles. 

Once you’re there, date-order it and create two sets of files. One for storage and one for the current year. Separate them into banking, bills, debts and investments. Provide each item with a folder, then group the folders of like items into hanging folders. Anything that is current year keep close at hand, anything beyond that, put it in a storage box that will hold 3-5 years’ worth of stuff, then put it away and forget about it. Rinse and repeat.

I know this is the old school version of how to organize things, but the same can be applied to digital. Some people prefer to use software programs that link all their various accounts and update them automatically. 

Mint is one that comes to mind, and will provide you with all the information you need on your phone, laptop, or PC. 

You can scan your back-up documents then export them to a program like Evernote or into Dropbox, or iCloud. 

This will file your copies of documents into a searchable pdf format if you use a program like Evernote, or in either pdf or jpeg formats if you use basic cloud storage. Create the same folders there that you would if you were using paper, and you will be able to search whenever you need the information. Either approach works. It just depends on where your comfort lays - the feel of paper or the glow of a screen.

The real key is to be able to quickly access the information you need, and without a lot of thought. While many believe it is essential to keep everything just in case, I’m inclined to suggest less is more. The only reason most people keep everything is because they don’t know what to keep and what to throw away. Unless you can write it off, last year’s grocery receipts or that Chapter’s receipt for a book you read in the summer isn’t necessary. 

While this may not clear out anyone’s garage, it might bring a small measure of peace to already overstressed brains.

Questions or comments: [email protected]m

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.