A disorganized financial life can spell disaster. But with a little effort, you can gain control of your money and start building a rewarding financial future. Start with these simple tasks.

Create a bill paying system

To avoid late fees and to understand exactly where your money is going, create a bill paying system. You must know exactly how much needs to be paid and when it needs to be paid.

Make a list with all of your bills, their due dates, and amounts owed. Place your list in a prominent location. I place my list on my refrigerator.  Alternatively, you may want to print a calendar and mark your bills on their appropriate due date. This will help you create an instant snapshot of your bills.

Next, create a filing system to keep track of all your bills. Instead of bills lying all around the house, they will be located in one place. I use a filing box and create a manilla folder for each account.  As bills come in the mail, I place them in their appropriate folder. When I’m ready to sit down and pay my bills, everything is at my fingertips.  My bill list and filing system ensure that every bill is paid on time.

You can also pay your bills automatically online every month. This is a great system, but it still pays to review your bill statements every month. This will allow you to notice new fees, mistakes, or price increases that might have slipped by you otherwise. In addition, sometimes your statement may contain great offers.  My electric company, for instance,  provided a 50% discount on a highly rated, energy efficient water heater.

List your debt

Many of us have debt but don’t understand fully how much we owe. The new year is a great time to make a list of all your debt. For each debt, record the interest rate and amount owed. Pay the minimum on all of your debt, but then use any extra money and apply it to your highest priority debt. This could be either:

1. Debt with the smallest balance. By dedicating extra money to these debts, you can pay them off quickly, creating psychological wins that will motivate you to pay off additional debt. Once a creditor is paid off, use the money originally dedicated to paying that debt and apply it to the next highest priority debt each month. This is the debt snowball technique promoted by many financial experts.

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2. Debt with the highest interest rate. By directing extra money to high interest debt you reduce your overall interest payments and the overall money you spend on paying off your debts.

Understand your income

Just because you earn a $65,000 a year salary doesn’t mean you can spend like you make $65,000 a year. Local, state, and federal taxes, as well as social security and health insurance contributions, can take a significant bite out of your take home pay.

Use the tax season to calculate exactly how much you actually take home each month. Understanding this will allow you to determine how much you can actually afford to spend each month.

Review your credit report

Your credit score is one of your most important pieces of financial information, affecting everything from how much you pay for a mortgage to whether or not you can even be hired for certain jobs. This score is based on your credit report.  Unfortunately,  nearly 80% of all credit reports contain errors, with 25% containing errors significant enough that it could deny individuals access to credit.

By law you’re allowed to get a free copy of your credit report from each of the major credit reporting agencies, Equifax, Experian, and TransUnion. Obtain these reports free, with no strings attached, by visiting annualcreditreport.com. This is the only federally approved website for obtaining free credit report information from the big three credit reporting agencies.

An organized financial life is a successful financial life. Take a few minutes this month to get organized and you’ll reap the benefits all year long.

BMWK, what are some of the things you do to get your finances organized?