The Ultimate 8-Step Guide To Organizing Your Finances

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There comes a time in all of our lives where we decide it is time to start organizing our finances. This time may come at many ages, but without fail, at some time we will need to organize our money.

The problem is, where do we start?

We all look at our bank account balances to make sure we have enough money for the bills, but beyond that is for the select few. The few that seemingly have magical powers to analyze all of their money and know where all of it goes.

In today’s society, we all have bank accounts at multiple bank accounts scattered across the web, multiple brokerage/investment accounts, loans at various banks and holding companies, and a whole slew of credit cards. Tracing the roots of this monstrosity can seem quite complex, but there is hope.

Once we understand our money the first time, it becomes easy to continue.

Let me tell you the story of where I began:

I started to track all of my finances right after college. Alright, that is pretty early, but I did just gloss over and ignore my finances while I was in college.

When I started to track down everything, I had to find passwords, find bank accounts, and make accounts with new holding companies for student loans. This process took a few days, but afterward, all was set.

Tracking my finances allowed me to see my true position post-college, one of a -$30,000 net worth. Because there was no way to hide the fact from my mind, it helped to motivate me to improve my financial position and save in the right manner to see growth. One year later, I had a positive net worth and 5.5 years hence my net worth is approaching $450,000.

The point is, get started organizing your finances today and you will be able to build momentum that will propel you to financial success.

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1. Write Down All Your Assets and Liabilities

To start organizing your finances you need to find write down all of your assets and liabilities. But first what is an asset and liability?

Assets: the cash and securities you own that can provide future economic benefit, like:

  • cash
  • investments
  • real-estate
  • vehicles
  • etc.

Liabilities are what you owe other parties, like:

  • student loans
  • credit card balances
  • mortgage
  • home equity loans
  • etc.

As you can tell from the colors above, assets are positive goodness, and liabilities are negative debt. Now we have to go around and find our accounts for all of these asset and liability types.

Remember, as we go through this exercise, no amount is too small to ignore. If we have $5 left in a bank account, either move it/withdrawal it and delete the account or record it as one of our assets. I had an account for years that only had $0.01 in it because I withdrew all the money from the account, but it got $0.01 interest that final month. It is still on my balance sheet.

All of our accounts should be available online today. However, if we are suspicious of the security of online banking, we can always go to the banks and analyze our bills and statements that we receive to achieve the same result.

Since we are aggregating all of our assets and liabilities together, it begs the question where do we store this information?

Tools for Tracking

To help us with tracking there are many tools available to us. Below are a few of my favorites:

All of these are free tools that can help us to record and organize our finances. Personal Capital and are both free online tools that link with our online accounts and auto-pull our credit card and bank transactions in and categorize them.

Once we have all of our assets and liabilities tabulated, it is time to move to the next step.

2. Calculate Your Net Worth

Net worth is a very useful metric and is the one measure of financial success that seems to be universally used.

Net worth = assets – liabilities

Because it is simple it can be used as one of our main metrics to track progress towards our goal of financial success and freedom.

From step 1, we take our assets and sum them up and then subtract the sum of our liabilities to get our net worth. Now the metric of net worth is not worth much (pun intended) without analysis.

Are we positive?


What assets give us the biggest boost to our net worth?

What are our largest liabilities?

We need to answer these question when it comes to net worth for it to be a valuable metric.

Also, as time goes on we can track our net worth and plot it, like I did mine below, to see our progress. This will help to motivate us to continue on to greater and greater heights.

net worth
This plot was generated with my favorite free finance program Gnucash.

Using Personal Capital makes this process a cake walk. They will track of our accounts and produce the net worth metric for us making it completely hands off. Once our accounts are connected to Personal Capital, they record all changes and can plot history for years to come.

3. Record Your Income and Expenses

Track down to even these pennies.

Without knowledge of where our money is coming from and going to how are we supposed to be organizing our finances?

Tracking our income and expenses is a great exercise for everyone. We must track everything down to the penny. No rounding,  no shortcutting. Real honest tracking of all of our income and expenses. No expense is too small to be left off. That $1 soda every day adds up over the course of the month.

It may seem like nit-picking to say we have to track every penny. Pennies aren’t worth anything anymore. Hell, a dollar really isn’t worth much anymore. But that’s not the point. We are building habits.

With the habit of tracking every penny, we will begin to really understand our money habits and get a true picture of who we are. Without it, it is pure conjecture. We must have data (the income and expenses we are recording) to prove that we are on the right path. Without the data, we are not organizing our finances, we are just creating a fantasy.

For more info on tracking and its power read Your Money or Your Life.

Once again, using Personal Capital, we can track all of our expenses and income with no effort at all. All transactions that show up on our accounts are pulled into Personal Capital and aggregated. We just need to in and categorize them, so we can see where we are spending money. The only manual entries will be cash expenses, but who uses cash anymore? (Actually, I do because I live in China)

4. Calculate Your Cash Flow


Once we have been tracking our income and expenses down to the penny the next metric that naturally follows is cash flow. It is also a very simple metric.

Cash Flow = Income – Expenses

We can also interpret cash flow to be savings. Obviously, when we rename cash flow to savings we know we want this to be a positive number.

We can put our cash flow to use by investing in the stock market, investing in real estate, investing in cryptocurrencies (speculative), or simply putting the excess in a savings account at 1% interest.

Also, like net worth, we can plot our cash flow and watch it from month to month. We want our cash flow to always be positive, but there may be certain months where it is not like a vacation or big purchase such as a car or house.

In this plot, Net Profit is equal to savings and cash flow.

5. Get Your Credit Score and Credit Report

Your credit score and credit report are pulled by any company that is taking a risk by loaning you money or services. I remember being quite surprised when the natural gas company pulled my credit report when I first got gas for my new apartment after college.

Taking the time to pull them and take a look is worth it.

You can get a great in-depth look at your credit score and credit report from Credit Sesame and Credit Karma.

However, the one truly free place to get your actual credit report from the 3 credit agencies is Annual Credit Report.

6. Step Back and Evaluate

Now that we have our metrics and are tracking our progress, we need to take a step back and evaluate what we have. Without this step, we do not get the full benefit of organizing our finances.

Net Worth

We should track our net worth from month to month and watch it build, hopefully. If it is not building we need to take a look at what we are doing. However, if we are retired, it will likely be going down and that is okay. We can project out into the future and estimate if we will have enough.

Cash Flow

When we tabulate all of our income and expenses our cash flow shows us our savings. Is it sufficient for our needs?

What can we do to increase our cash flow?

We can certainly look into ways to make extra money on the side. With 2 factors in the equation, income and expenses, it should be obvious. We can either increase income or decrease expenses. The best way is both. To decrease our expenses we should look at all the categories that we spend in and decide if we have the opportunity to cut back. It may be that there is an opportunity here and there may not be, but we must look honestly and decide.

If we need help figuring it out, we can look to general budget hacks and home budget hacks to save more money.

Credit Report and Score

Pour through each of our credit reports so we have an understanding of what kinds of things are being reported and also look for any errors. Things are misreported all the time so it’s important that we stay on top of them.

If we do find an error then we need to get it corrected. To do this, we simply contact the reporting credit bureau and let them know we want to file a dispute. They are required to investigate every dispute within 30 days of our request.

If we have negative entries on our credit report they will remain there for 7 years. After 7 years they should automatically be removed. If we find some negative entries older than 7 years on our report we can request to have them removed.


Taking the time to step back and evaluate our finance organizing ninja skills is crucial to financial success. Without this step, there really is no point in organizing it to start with. Gathering data is great, but without analysis, we cannot drive any decisions based on it and it is useless.

So let’s take the time to really think deeply about how we can use our newfound knowledge to better financial lives.

7. Create Monthly and Annual Budgets

From our tracking and categorization of income and expenses, budgets emerge naturally. What I mean by this, is that the total of each category is a natural starting place for our budget amounts.

This will be our natural budget and we will not feel the squeeze by using a budget. If we want to make more progress, have a higher cash flow, or save more, we will need to restrict some expense categories or expand some income categories.

The budget that we create out of our income and expense profile will help to guide us in future months and keep us on the straight and narrow to financial success.

8. Repeat Each and Every Month

We may wish for this to be a one and done exercise, but “once you pop you just can’t stop.” Sorry, I couldn’t resist a little Pringles jingle.

Basically, once we get rolling on organizing our finances, then we need to keep the momentum going or they quickly become unorganized all over again. We have built the framework, organized our assets and liabilities, entered everything in Personal Capital, tracked income and expenses, reviewed our credit score/report, and created a budget.

Now, it is time to follow through on organizing our finances so we can continue on our path to financial success.

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Before you can achieve financial freedom you need to make sure your finances are organized. This is the ultimate guide for how to organize your finances. budget | assets and liabilities | income and expenses | cash flow | credit report