How to organize your financial documents

February 24th, 2012 Teri Keenan

With this year’s tax deadline just around the corner, you’ve probably started to see more and more financial documents arrive in your mailbox. One of the ways to make things easier on yourself when you file your taxes is to have your financial documents already organized.

Thankfully, this doesn’t have to be a big production. Getting the framework in place doesn’t need to take very long, and once you have things set up, it’s fairly easy to keep with it.

We’ve put together some simple tips that will help you stay organized all year long.

Gather up all your financial documents.

Pull together all documents related to your finances. This includes bills, statements, paperwork, notes, and unopened mail.

Create the space.

Designate a spot in your home where you will file your documents. This could be a filing cabinet, accordion files or, if you choose to file items electronically, on your computer.

Set up your filing system.

Review your documents and determine how you want to divide and file them. If you are filing electronically, you can set up sub-folders on the computer (or USB stick), providing you with an easy way to store your scanned documents. In a filing cabinet, you will need to decide how to label the file folders.

We’ve put together a list of common categories.  You may find that fewer or more files are necessary depending on your personal situation, preferences, or number of documents you have for a particular file.

  • Car/Auto – maintenance records, registration, tiles.
  • Bank accounts – monthly/year-end statements, and other bank related materials.
  • Credit cards – your annual credit report, statements.
  • Education – certificates, diplomas, enrollment reports, transcripts, etc.
  • Employment – paycheck stubs, benefits handbook, resume.
  • Healthcare – recipes, medical records, vaccination information.
  • Home – repair and maintenance records
  • Insurance – documents for all insurance policies, including car, home, life etc.
  • Investments – statements, account records, retirement plans, IRAs, etc.
  • Loans – statements.
  • Utilities – statements for water, gas, electric, phones and cable or satellite.
  • Warranties – files for any active warranties.
  • Wills – estate planning documents including copies of your will and living will.
  • Taxes – receipts you collect throughout the year you know you’ll need at tax time.

Important documents, such as your will, marriage certificate (if applicable), trust documents and other materials should be kept in a safe (or other flame-retardant storage spot) or in a safety deposit box.

It also makes sense to create a document that lists all your advisors (names, phone numbers and emails), important passwords and other important “how-to” information. This is particularly important if you are the main person in your household who manages day-to-day finances. It allows your loved ones to quickly find important documents, should something happen to you.

Develop a system for bills.

In addition to the categories listed above, create the following folders to better manage how you pay your bills:

  • Bills due – this is where you will store all the bills you receive in the mail before paying them.
  • Bills paid – after you’ve paid your bill, move it into this file until it is reconciled and processed.
  • Shred – Once the payment has been processed, you can either move it into the appropriate file (as outlined above) or shred it.

How long to keep certain documents.

Many financial documents, including statements, bills, receipts, pay stubs, and investment statements can be shredded when reconciled, or when new versions come to replace them. If you need them for warranties or tax purposes, you can scan receipts and statements to save digitally, or keep in a special file for those items.

We recommend that you keep your tax returns for seven years before disposing of them. That’s because the IRS has 3 years to come back and audit you, and 6 years to actually complete an audit. Documents that you need to support your tax return should be kept with your tax return. You can keep hard copies of these items, or scan them to save them digitally.

The documents that you need to keep longest are those related to investments, loans, vehicle records, titles, original life insurance and annuity policy documents, estate planning documents and retirement plan documents. You should keep these for a long period of time – including hard copies, which should be kept in a safe place. You can scan them for backup, but the originals should be guarded carefully.

Teri Keenan

About the author

Teri Keenan is Consumer Lending Officer at MidWestOne Bank. She works in the retail department, specializing in training of policy and procedures for Consumer Lending.

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