30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances

Part II. Get Organized

Amid the financial crisis that began in 2007, pundits have pondered the many factors that contributed to American consumers letting their finances get so far out of whack. Some conjectured that Americans have an emptiness in their lives that led them to seek solace in stuff: ever-larger houses, expensive cars, storage lockers full of possessions that they didn't really need. Others chalked it up to our culture's emphasis on immediate gratification: Buy it today and worry about paying for it later.

But one factor has gone completely unheralded, maybe because it's so mundane: paperwork. As anyone who has ever closed on a home loan or tried to read investment statements knows, the financial services industry cranks out a voluminous amount of paper. Some of it is boilerplate legalese that you don't really need, while other forms and statements are more important but inscrutable if you're not steeped in the business. The net result is that many people tend to ignore their financial statements altogether, thereby losing track of their monthly inflows and outflows.

By contrast, if you know what to focus on and what to tune out, and manage your financial documents as you receive them, you'll be forced to reckon with how much you have in assets and how much you owe. You will thus have a better sense of your household's cash flows and balance sheet, as well as where any potential trouble spots might lurk.

There are other concrete reasons to keep your financial documents ...