BalanceTrack: Money Management

Chapter 2: Get Organized Being organized is essential to efficient money management. Once all of

Chapter 2: Get Organized

Being organized is essential to efficient money management. Once all of your information and paperwork is in order and accessible, you’ll never have to waste time searching for important documents, wonder about account balances, or miss bill-payment deadlines.

Designate a personal money space
Set up an area in your home where you can conduct all of your personal financial business. Ideally, it should be near your computer and file cabinet.

Have the right home office tools
You can organize your personal finances with just a few home office tools:

  • File cabinet – File receipts, warranties, tax returns and supporting documents, paid bills, and account statements so you can quickly access them. (Ongoing accounts should have their own folder.) File cabinets come in a variety of sizes, so you do not need a ton of space to stay organized.
  • Shredder – To guard against identity theft, invest in a shredder (preferably one with a “cross cut” feature, where instead of slicing the paper into strips, it cuts at various angles). Use it to destroy all personal and financial documents before you discard them. Specific items that you should shred include:
    • ATM receipts
    • Account statements
    • Canceled and voided checks,
    • Credit reports
    • Employment pay stubs and records
    • Expired passports and visas
    • Expired credit, debit, and ATM cards
    • Pre-approved credit card applications
  • Fireproof safe – In a home safe or firebox, keep:
    • Insurance policy documents
    • Deeds/titles for your home, car, and other real property
    • Estate-planning documents (such as your will and power of attorney)
    • The key to your safe deposit box
    • Birth certificate, passport, marriage certificate, and Social Security card

Go paperless
The more incoming paperwork you have, the harder it is to keep straight. A great way to simplify your system is to sign up for online statements. It cuts down on mailed bills that can get lost in the mail or a shuffle of paperwork and reduces your vulnerability to identity theft. It is also a good idea to scan important documents, such as titles and receipts for large-ticket items, onto your computer. This way, you will have a backup in case the original documents are destroyed or lost.

Create a personal financial directory
Having a financial directory which lists all of your account information makes it easier for someone to cancel your accounts or otherwise manage your finances if you are not able to. (It can also come in handy if you, for example, lose your wallet or forget a password.)

Think about all of the accounts and obligations you have, including a mortgage or rent, loans, credit cards, utilities, checking and savings accounts, investments, retirement funds, and insurance. Using the Personal Financial Information Organizer or a piece of paper, for each item list the account number, who it is with, contact information for the company, online username and password, location of statements, and monthly payment and due date (if applicable). Also include the name and contact information for any financial advisors, such as an accountant or insurance agent. Put the list in your fireproof box, and let a trusted friend or relative know where it is. Periodically revisit the list to make sure it is up-to-date.

How long should documents be saved?

  • Receipts for minor purchases can be tossed after you have checked them against your monthly account statement. Receipts for major purchases should be saved as long as you have the items. Receipts for tax-deductible items should be saved with your tax return.
  • Utility, credit card, checking, and savings account statements should be saved for a year.
  • Monthly and quarterly investment account statements should be saved until the year-end statement is received. Year-end statements should be kept until the investment is sold.
  • Paystubs should be held until you receive your W-2.
  • Loan documents and statements should be saved until the loan is paid off. The last statement that shows the loan was paid should be saved permanently.
  • Tax returns, W-2s, 1099s, and other tax-related documents should be saved for seven years.
  • Insurance policies and estate-planning documents should be saved as long as they are in effect.
  • Titles to property should be kept as long as you own the property.
  • Your birth certificate, medical records, Social Security card, and marriage certificate should be saved permanently.

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