One of the best ways to maintain a healthy financial life is to get organized. We all hold onto financial documents and records for sound reasons, but at some point it can cross the line into “pack rat” territory. Follow these steps to decide what to keep, what to toss, and how to organize what you have left.
Step One: Clean Out. In most cases, you can toss utility bills, bank statements, credit card statements, insurance policies, and paycheck stubs that are more than one year old.
Step Two: Get Organized. The most important thing to remember is that your filing system should make sense to you. Having said that, it’s a good idea to create a space for items that you will keep permanently:
- birth, death, and marriage certificates
- adoption papers
- citizenship documents
- military discharge papers
- your Social Security card
You should also keep a folder for receipts, especially for large purchases or anything you plan to use as a tax deduction. As for everything else, keep tax returns for about three years, mortgage documents and property appraisals for as long as you own the property, and investment statements for as long as you hold the asset.
Step Three: Go High Tech. If you’re short on space, or just want an added layer of security, scan all of your important documents and store them online using a cloud system. Keep your files secure by choosing a password that is difficult to guess.
Step Four: Stay on top of it. Set aside a certain time each week to open mail, file away documents, or discard unnecessary paperwork. Once you gain control of your system, you will only need a few minutes to maintain it.
Step Five: Remember to purge. When you receive an updated insurance policy, you can toss the old one. When your annual investment statement arrives, you can get rid of the monthly statements. You might choose to purge on a continuing basis, or do it on a larger scale a few times per year.
Step Six: Shred old documents. When you do purge old documents, make sure to destroy them first. You might be surprised at how many identity thieves go dumpster diving in search of Social Security numbers, bank account information, and so on.
As always, if you have any questions about financial planning, give us a call. We can help you identify your priorities, and put a plan into place to work toward your goals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.