Let’s Get Organized!

Let’s Get Organized!

Eileen St. Pierre, The Everyday Financial Planner 

A common New Year’s resolution is to get more organized.  Here are 6 steps to help you out.

Step 1 – Round everything up

Are your utility bills in a kitchen drawer?  Are your bank statements in a pile with your checkbook on your dresser in the bedroom?  Perhaps you keep all the information regarding your investment accounts in the family room near your computer.  It’s a good idea to store all your records in one place.  

Step 2 – Don’t make piles, make files

Here’s a good use for that gift card you received for Christmas – invest in a file cabinet and a box of file folders.  Sort all of the information you rounded up and create files like Medical Records and History, Dental Insurance, Bank Statements, IRA, and Household Repairs.  Put the files you access most often in the front of the file cabinet.  You may also want to invest in a portable file box to keep files you may need to take with you in case of an emergency.    

Step 3 – What to keep & what to throw away

You do not need to keep every slip of paper for the rest of your life.  Invest in a shredder if you do not already own one.  You need to keep indefinitely those permanent or original records that do not change over time such as birth and death certificates and marriage records. Put these records in a safe deposit box.  

Some records serve as proof of payment or a transaction.  You need to keep these for multiple years.  Examples include tax returns with documentary proof (keep for a recommended 3 to 6 years), title to car until it is sold or transferred, receipts and owner’s manuals for major appliances until they are replaced, and mortgage contract and receipts for home improvements until mortgage is paid in full and house is sold or all claims of major damage are settled.

Some records you only need to keep for about a year such as bank and/or credit union statements and insurance policies until they expire and new policies are put into effect.

Finally, some receipts (ATM, bank transactions) you only need to keep until they are matched on your billing statement.  Keep credit card receipts a little longer (60 to 90 days) in case you need to return the item.

Step 4 – Save those receipts

Trying to find a receipt to document a tax-deductible expense?  Use a file folder or label some envelopes, such as Business Expenses and Prescriptions.  When you get a receipt, file it.  When tax time rolls around, your work will be much easier.

Step 5 – Go digital

You need to create a household inventory.  Use a digital camera to take pictures of your belongings in every room of your house.  Don’t forget to also take pictures of items in your garage, any outbuildings on your property, and the exterior of your home.  Store the pictures in a computer file, along with descriptions (serial numbers, purchase date, original cost).  Store the files on a flash drive and put it in a safe place so you can easily access it if you need to evacuate.  Don’t just leave the files on your computer hard drive.  You can also email the files to family or friends.

Look into reducing the clutter in your file cabinet by storing files electronically.  Are there any documents you can scan into your computer such as old tax returns?  Consider using personal record keeping software to sort and summarize your income and expenses—you’ll be glad you did and you’ll learn a lot about your spending habits.

Step 6 – Get your financial house in order

Make it a habit to review your investment accounts annually.  A great time to do this is when you are filing your taxes and finalizing IRA contributions for the year.  Are your stock allocations at the appropriate level for the amount of risk you are willing to accept, or do you need to re-balance your portfolio? 

Following these simple steps can help you start the New Year off on the right foot.  

Visit my Basic Financial Management page for more information.