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Do you belong to the accumulate and procrastinate school of personal financial recordkeeping? This mini-lesson will help you bring order out of chaos, to keep what you need and toss the rest.
Personal documents, household records and important legal papers accumulate continually. A recordkeeping system will help you organize the important information concerning your household financial affairs and keep track of your personal finances and hard-to-replace documents. Another benefit is to have all your tax records and documents in a designated space so you can prepare your tax returns in a shorter time with more accuracy.
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. Recordkeeping can help you save time and money while giving you peace of mind.
Setting up a recordkeeping system includes four steps:
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:
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. The Personal Financial Information 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
The financial records and documents you keep at home can be organized into several categories: Home Recordkeeping Categories and adding or deleting categories as needed.
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 somewhere outside 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.
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.
To avoid storing unnecessary paper, once a year you can decide which records to keep and which to throw out. Keep records in active files that you refer to regularly, such as current bank statements, canceled checks, bills, receipts, and tax deductible items. Other records, such as last year's tax and bank records, can be stored in an inactive area.
All You Need To Know About Keeping Financial Records by Ken and Daria Doran, Money Magazine, p. 33, (April 1994).
The Best Investment Software by Gregory Spears, Kiplinger's Personal Finance Magazine, pp. 99-107, (November 1996).
For The Record by Steve Kichen, Forbes Magazine, pp. 222-224, (June 19, 1995).
Keeping Track Of Your Cash Flow by Gracian Mack, Black Enterprise, pp. 93-95, (October 1994) Personal Finance Software, Consumer Guide Magazine, pp. 197-200, (September 15, 1996).
They're Living the Good Life on $17,580 a year by Lesley Alderman, Money Magazine, pp. 132-136, (January 1997).
Top Personal-Finance Software by Jim Sulski, Consumer's Digest, pp. 61-63, (September-October 1996).
Two Family Budgets: Different Means, Similar Ends by Christine Duff, The Wall Street Journal, p. B1, (April 14, 1997).
Use Your Computer To Stay A Step Ahead Of Events That Could Devour Your Budget by Eric Tyson, Money Magazine, p. 37, (June 1996).
What Works and what Doesn't in the World of Digital Finance by Peter Keating, Money Magazine, pp. 134-143, (July 1996).
What You Should Do Now So Your Loved Ones Will Know What To Do When You Die by Ken and Daria Doran, Money Magazine, p. 31, (January 1996).
Get A Financial Life; Personal Finance In Your Twenties And Thirties by Beth Kobliner. A Fireside Book/Simon & Schuster, (1996). $11.00.
Nolo's Personal Recordkeeper 4.0 Software. Nolo Press, 950 Parker Street, Berkeley, CA 94710. Telephone: 1-800-992-6656. IBM/Win code RKP4 and Mac code RKM4. $29.97. 1996.
Quicken Deluxe Software. Intuit, P.O. Box 7850, Mountainview, CA 94039-7850. Telephone: 1-800-433-8810. IBM/Win and Mac, $59.95. 1996.