Our financial documents can pile up and take up major space in our handbags, drawers, and file cabinets without our even noticing it. By the time we finally find time to organize them, there’s just so much to rummage through that it’s difficult to decide what’s worth keeping and what should just be tossed into the trash. To make your financial life easier while freeing up some much-needed storage space in the process, here are some ideas on how you can better organize your documents.
Getting Rid of Wastebasket Material
A good portion of the papers that may be spilling over from file drawers or meticulously kept in envelopes are actually outdated and unnecessary documents that may not even be worth the shoe boxes they’re stored in. Among the records that are better off thrown out are receipts of items paid for in cash, mail for various offers that you have no particular interest in and credit card statements that you have already thoroughly checked for any erroneous entries.
Receipts for purchases made using debit or credit cards should be kept only until such time when you are able to compare this with the statement, while receipts for big ticket items such as for a major home appliance should not be discarded if the warranty is still in effect.
Organizing Documents According to Importance
For those records that need to be stored, it is still important to be able to identify which ones should be kept for good and which are only useful for a certain period.
Personal records including birth and marriage certificates, passports, Social Security documents, and divorce papers are among those documents which you should keep permanently. Life insurance policies, brokerage statements, proof of IRA contributions, land titles and house documents are also vital papers which you would want to have in your possession for as long as the assets exist.
Tax returns with supporting documents should ideally be kept for at least seven years, while loan papers and vehicle records are to be maintained at least until loans are paid off. On the other hand, hang on to regular monthly bills and bank statements only until payments have been made, and you’re sure that no incorrect entries are reflected on the account.
Making Use of Digital Tools
In this day and age where everything is going electronic, we can keep track of our finances without a ton of papers to sort through. For instance, even if you dispose of bank statements and credit card bills soon after receiving them, you can easily request for a copy of these documents from the bank’s online archives if you need it in the future. In addition, monitoring cash flow, individual bank balances and credit card usage is a breeze with the use of personal finance software available online.
Proper Document Disposal and Storage
Finally, it’s crucial to use proper disposal and storage methods in handling financial records. Documents that contain pertinent personal information should be shredded before throwing. At the same time, storing important papers should be done with security as the major consideration. Leaving them in bank safety deposit boxes would be an ideal option, but if this arrangement is not possible or convenient, your next best course of action is to keep the documents in a dry, labeled plastic container with a lid.
If you don’t want to find yourself buried in a mountain of receipts, tax documents, bank statements and other financial records, there’s no better time to put your documents in order than now — and not a day later.