Organizing Records and Important Information
Why
Organize?
An
important benefit of keeping orderly records is that you can document payments
when required; such as to prove payment of child support, medical bills to
insurance companies, or to obtain warranty coverage. Also you can document
losses for fire damage or theft for insurance claims. Record keeping can help
you save time and money while giving you peace of mind.
Getting
Started
Designate
a personal money space. Set up a safe and private area where you can conduct
all of your personal financial business. This is where you will be keeping such
documents as incoming bills, shopping receipts, and tax records. If you have a
computer, a logical workspace will be close by, particularly if you will be
using software designed to help you with money management. Information can be
organized any way it makes sense to you, but keep in mind that it’s probably
more manageable if you organize it by how it will be used.
Setting
up a record-keeping system includes four steps:
1. Gather and
organize financial information.
2. Decide where each
type of record should be kept, in a home file or safe-deposit box.
3. Organize the
records kept in your home file and place appropriate records in a safe-deposit
box.
4. Review and discard
unneeded records.
Step 1:
Organize Financial Information
Organizing
important personal information will make money management easier for you and
for others who may be responsible for handling your financial affairs. When you
organize financial papers, the first step is to locate all of the documents and
related information such as phone and account numbers. Gather information in
the categories such as:
• loan related documents - promissory notes, disclosure statements,
notifications of lender change, repayment schedules, lender correspondence,
income tax returns
• personal papers - birth, marriage and death certificates, divorce
decrees, adoption papers, passports, citizenship papers, military service
records
• automobile and other
titles
• certificates of deposit or
bank savings certificates
• list of insurance policies
and their numbers
• property records, title and deeds
• home improvement records
• legal papers, leases and
contracts
• copy of household goods
inventory with photos or
video
• names and addresses of
your financial advisors and financial institutions
• copy of financial plans, net worth statements
• list of checking and
savings accounts by
financial institution
• papers pertaining to valuable
property such as
jewelry, silverware
Step 2:
Decide Where to Store Your Financial Records
Financial
records can be kept either in a home file or in a safe-deposit box at a
financial institution. Active records and those of limited value can be kept in
a home file. Consider using a safe-deposit box to store records that would be
difficult to replace. These records should be reviewed annually and when there
are major changes such as marriage, divorce, or death of family member.
Step 3:
Organize and Store Records Kept at Home
Select a
convenient place such as in the kitchen or home office area to keep important
household financial documents. A file cabinet that is fire and water resistant
makes good sense. Or you can simply use an inexpensive cardboard box that holds
file folders. Keep it handy, where it can be accessed easily, probably not on
the top shelf of the closet. Store duplicates of important household papers in
a safe place outside of your home.
At least
one other person should know where all
important records are kept and how they are organized, so that in an
emergency that person can locate information quickly. A logical place to keep
this information would be at the front of the active files. The information
should include a list of items in the safe-deposit box and where the key is
located.
Benefits of Electronic Organization
Organizing
electronically is a great option. You can scan in all of your paper documents,
and save copies of all of your electronic statements and receipts. Keep your
files on your hard drive (remember to make regular backups and password protect
the information), or, if you're sure it's secure, store the documents online.
By organizing documents on a computer instead of in paper files, you can save a
lot of space in a crowded filing cabinet. Remember
to keep hard copies of records such as birth certificates and passports.
Step 4:
Review and Discard Unneeded Records
You will
accumulate many financial papers over time so it is important to know what and
how long to keep them. You can also separate papers into active and inactive
files.
• Personal records that provide documentation of events such as birth,
marriage, divorce, death, military service, adoption, naturalization, and
medical records should be kept
permanently.
• Tax records such as federal and state income taxes, gift, and
estate tax returns should be kept at
least six years. The IRS has three years from the time of filing to assess
additional taxes. The time period can be extended however, if you substantially under-reported income or for a fraudulent return. Some financial advisers suggest that you keep a copy of your tax
returns with documentation for at least 10 years. For tax purposes, papers
documenting home purchase and improvements should be kept as long as you own
the property or are rolling over profits into new property.
• Housing and investment
records such as
titles, deeds, trust agreements, wills, retirement plan agreements, and power
of attorney documents should be kept as
long as the agreements are in effect. Investment purchase and sale records
should be kept for 6 years after the tax deadline for the year of sale.
• Consumer purchase records, such as receipts and warranties for major purchases
should be kept as long as you own the
item or until the warranty expires.
• Only Keep What
is Necessary
Taken from:
http://www.financialaid.uconn.edu