Here’s a few simple steps to help organize your personal financial data.
Organize Monthly Bills
I have moved to paying all of my bills online, either through automation, or simply paying on line when I get the email notification. This includes stuff like Household Bills, Credit Card Statements, Mortgage Statements, etc.
I don’t download the monthly statements anymore; after I pay each bill, I simply file the bill email notification Under “Bills” in my Gmail folder, and then when I get the payment email notification, I file that under “Receipts” in my Gmail folder (I had to create these folders). If I ever have a question, I can always search on the account name and all of the bills and payment receipts will come up chronologically.
I just don’t see the point in keeping the paper statements anymore (the way my mother did). Even if I can’t find something in gmail, I can always log into my account and look at the history.
With physical receipts and ATM slips, I keep them so I can verify them clearing online, and then I shred them. Having a small shredder in your home is a good idea!
Did you make a major purchase? You probably got a physical receipt, or even an itemized receipt. You might be able to deduct sales tax (in states that charge sales tax), and if not, it’s still a good idea to hang onto big purchase info. I recommend having a large envelope with the year written on it, and stuff everything in there…it will probably come in handy for tax time.
Organize Monthly Statements
I differentiate between bills (money I owe) and Statements (money I have), like in Banks, Investments or Retirement Accounts. I usually take some time four times per year to download the PDFs (most banks are monthly, but most investment company statements happen quarterly, so technically, I am dropping the ball by not doing my banking statements monthly). I just have a folder in my drive labeled Statements (and 2015, 2014, 2013 within etc.). When I download the statement, I rename it with the account name so it’s easily searchable—for example, my 401k statement downloaded for the first 3 months of the year would be called 2015_03_Vanguard401k.pdf
Organize Physical Documents
Here are the things that I tend to never get around to scanning and just hang onto:
- Medical Bills and Insurance Policies
- Major Purchase Info and Receipts
- Supporting Docs for Taxes
- Sales & Home Improvement Info
- Existing Mortgage Paperwork and Satisfied Loans
I just have a large standing file for all of this stuff…honestly, since I have gotten away from a lot of paper filing, I find it’s sufficient to just have a holding bucket for all of this stuff, because if I need to go back and look at something, there isn’t too much to sift through.
You remember I said I stuff major purchase receipts into a folder? After tax time, it goes in this standing file under Major Purchases.
I suggest you keep retention guidelines from the IRS Publication 552 in your standing file so that every year you can review them and weed anything out that you don’t need to retain (when you do taxes is as good a time as any). I think it would be cumbersome to create separate filing systems for each retention timeframe (maybe that’s just me being lazy).
Hold 1 Year:
- Pay Stubs & W-2 info
- Quarterly Investment and Retirement Account Statements (you usually hold these until you get the Annual Statement for each account in January of every year)
Hold 3 Years:
- Tax Returns & Supporting Docs
- Medical Bills & Cancelled Policies
- Home Sale Records & Home Improvement Receipts
- Stock Sale Records
- Old Investment Statements (hold 3 yrs after you sell/close the account)
Hold 7 Years:
- Satisfied Loans (and any active loans if the term is longer than 7 years)
- Insurance Policies
- Annual Retirement Statements
- Annual Investment Statements
- Property Records & Disputes (Major Purchases)
- Stock Records (cost basis)
- Credit Applications
Organize Forever Documents
- Birth Certificate
- Adoption Papers
- Social Security Card
- Paid Off Mortgages
- Marriage License
- Divorce Decree
- Wills, POAs, Health Directives
- Death Certificates
You don’t have to organize all of this at once; just pick a few things to implement, and revisit this in a few months to see what else needs tweaking. Not pretty or exciting (unless you buy a pink fire safe), but helps with more peace of mind!
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