Organize Your Finances
October 27, 2007
One of the best ways to know where you are financially is to keep good records, but to keep good records you need to be organized. This article will discuss some options that you have for making your records and transactions easier to find and easier to use.
The first thing you should do is organizing your statements. This can a daunting task for those who have neglected it for a long time but the work is worth the effort.
Here is a list of the some of the more important documents that you want to have on hand and in your filing system.
Information concerning your checking and savings accounts.
All pertinent information on your retirement accounts. This would include your IRAs, Roth IRAs and 401(k) statements.
Information on your non-retirement accounts. These are documents pertaining to other types of investments that you may have.
Credit card accounts including any department store accounts or gas cards that you may have and use.
Loan papers. This includes your home mortgages and any other outstanding loans such as car loans and student loans.
Insurance statements such as life, disability, home, car, etc.
All tax returns for state, federal and any supporting documentation that you may need should be kept in case of an audit. Keep these for at least seven years.
Your current will, as well as any papers dealing with current trusts. If you have a living will, this should be included also.
Once you have your documents together it is time to file them in a systematic way. The best organizational system is the one that works best for you and that meets your needs. It is a good idea to create separate files for each account so your account history is easily accessible.
The following is a suggested time table for keeping various documents.
Monthly account statements: one year. Most institutions will issue an annual statement summarizing your account activity. Once that is received and checked for accuracy, you can discard the monthly statements.
Tax returns: seven years. The IRS can audit you up to seven years after a return is filed. At a minimum, you should keep your state and federal tax returns and any supporting documentation for that length of time.
Loan papers should be kept for at least the length of the loan plus one year. It is all right to keep this papers longer, especially home loan papers.
After you have set up files for all of your accounts you will need to find a very safe and very secure place to store these files. If you plan to keep them at home you should invest in a fire proof lock box. This will protect the documents in case of a house fire. Another good option is to rent a safety deposit box at the bank. Regardless of where you store these important papers, make sure that they are protected from the elements. Losing these documents or having them destroyed by flooding or fire can cause you a lot of trouble. Protect them with care