Try these hints to make keeping your finances organized a little easier.
- Use the same names for electronic and paper files.
You probably get some bills and statements electronically, and others paperwork through the mail. You may even get some bills in the mail that you turn around and pay electronically. Make sure your filing systems are parallel for the two kinds of documents.
- Don’t keep everything.
- While it’s tempting to just keep all financial records, forever, it’s really not necessary. Documents you’ve saved as tax records need only go back 3 years (7 years if you saved them to show a loss).
- Keep transaction receipts only until you verify them on the next monthly credit card or bank statement. Keep the credit card and bank statements only until you receive the year-end summary reconciliation.
- You get a new insurance policy booklet every year. Throw away the old one.
- For a handy list of what to keep and what to shred (don’t just toss financial records!), please click here: http://www.forbes.com/sites/kellyphillipserb/2016/04/25/how-long-to-keep-tax-records-and-financial-documents-after-tax-day/#451b9b8028e3. If you do not live in the United States, a tax accountant (or the equivalent) can help you determine what records to keep and for how long.
- Keep up every day.
Once your system for financial record-keeping is in place, spend a few minutes each day keeping it updated. Put incoming bills to pay in either a physical or electronic folder. Make a note a few days before the due date on your calendar (to allow time for the mail to arrive). When you check your calendar each morning, you’ll know what payments to make on that date. When you have paid each paper bill, write PAID on the portion you keep and the date, and file it correctly.
- Make a notebook for tax documents.
Create a Tax Notebook with folders for holding paperwork. Print off copies of electronic records that are tax-related and include them in the notebook’s folders along with paper records. Store all tax-related documents in the proper folder, labeled by document type. Be sure to keep all proofs of charitable donations and 1099 forms for miscellaneous income. Keep the notebook updated as part of your daily financial filing chores. Next spring you’ll have all your tax records neatly stored in the notebook.