To finish off the ‘financial life' checklist series, there are three more points I think are important.
Optimise
Part of a good system is continual refinement to make things better and more streamlined. Take a look at every element of your system. Let’s take your investments for start. Maybe you have two or three different savings accounts, plus a Cash ISA. But you also have a S&S ISA and a P2P investment over here.
You’ve dabbled in a few things and have stuff in quite a few different places. Ask yourself: is this optimal? Is it achieving anything in its complexity? If not, then simplify, or, to put it a better way, optimise.
Repeatedly ask yourself WHY are things how they are – how did my finances end up in this state? Is there a reason, and if not, is there a way they can be put in better shape? You’d be surprised at just how much tidying up can be done. This will clear space in the filing cabinet and more importantly, in your head. Simple is best, I’m telling you.
Collaborate
If there are two of you in partnership in your home personal finances, then collaborate to the extent that you want to. At the very least, if you have a partner who is totally disinterested, they need to know where everything is held and what is where.
Do try to gently include them in the process though. If they are aggressively non-engaged and want nothing to do with working together with you to improve the household’s finances, then personally, I’d question the wisdom of maintaining that relationship. But I’m not a relationship counsellor, so I’ll leave that there.
Find a way to get together on this stuff as often as you need. Monthly works well, quarterly is a minimum, I’d say. If you’re budgeting together, then monthly is a minimum. Given that we’re talking specifically about organisation here, even if one partner is taking the lead, the other will still probably need to check things, sign things and be involved to some extent.
The active partner can make it easier for the more passive one by going through things ahead of time and preparing so that the collaborative part doesn’t take longer than necessary.
Have an Inbox
I am a big believer in the power of the Getting Things Done (GTD) System of self-organisation, created by David Allen. He talks about having a series of inboxes where anything which comes into your life is first ‘staged’ in the inbox so that it can then be dealt with.
I have an inbox at home in our hallway cupboard which houses the filing cabinet, the printer, the shredder and all manner of extra stuff that I won't bore you with. When post comes in and I don't have the time to deal with it immediately, it goes into the inbox.
I do the same thing with my email using the actual inbox as an inbox. Most people use their email inbox as a massive “I can’t or don’t want to decide what to do with this email” repository, but I like to get to Inbox Zero every day, which requires actually processing what’s in it.
Having an inbox means that you don't have to have stuff cluttering up your house. Everything you need to deal with is in one place. Or two places if you count your email inbox! That way, you’ve only got a couple of places you need to go to to start processing and getting stuff out of your inbox.
So, how do you get actually get your stuff out of your inbox?
Ask the GTD Question
David Allen’s system suggests that you ask a simple question: is there anything you need to do with this email or piece of paper? If yes, then either do it now or defer it to a later date, making a note in your calendar so you don't forget. If no, then you either file the document or email, or you destroy/delete it.
This is a significantly more powerful approach than it sounds. Simply asking if there is an action pertaining to this document, which is a binary answer, means you can deal with that document immediately with a little mental effort.
This is the key to staying on top of any system: It needs to be as frictionless as possible, with little or no resistance to engaging with the elements in that system.
The process of inbox to a decision whether to do, file or delete is pretty easy – anyone can do it – and it makes it easy to stay on top of your personal finance system. So much of the hard work with sorting out your financial life is at the front end and tidying things up, especially if you’ve never done it before. Thereafter, the difficulty is staying on top of it and making a decision about everything. David Allen's ‘Making it all Work‘ is helpful too here.
Review Annually
It’s so important not to let things drift. Making a point of sitting down once a year to take a look at everything will do wonders for your finances AND your peace of mind. There’s nothing worse than that nagging feeling of not being on top of everything.
And sometimes the thought of the amount of work it might take to get everything tidy, is itself a barrier to doing so. But if you’ve worked progressively through the checklist, you’ll have done the hard work in bite-size pieces over time, and the annual review will be a walk in the park as a result.
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