How to Handle Financial Records

July 30, 2013
By Vanessa Bright, Author
Financial Futures Now

The first step in taking control of your finances is to get your financial records in order. When was the last time you cleaned up your financial records? Do you have a pile of bills and statements lying around unopened? Being disorganized about your financial records makes it harder to give yourself the financial checkups that you need on a regular basis. When you are not getting the financial checkups that you need, you put your financial well-being at risk.

Here are some steps to help you get organized:

  • Assemble your financial documents from all sourcesrandom piles, drawers, top of kitchen table, etc. Sort them into the following piles: 1. Monthly bills, bank statements and pay stubs 2. Investment statements from retirement plans, stock accounts, other; tax returns and supporting documents. 3. Policy documents and deeds (home, other real estate, car titles, insurance policies) warranties and user manuals. 4. Life documents: marriage licenses, birth certificates, passports.
  • Create paper files for each type of document listed above. Color code them if you like.  Electronic files are another option. However, if you can eliminate paper by going paperless, remember to back up your documents on a regular basis. Documents that are hard to reproduce should be stored in a safe, secure area that is fireproof and water resistant.
  • Recycle and trash old documents. If you are disposing of these documents, shred them first. Dumpster diving is a common way for identify theft to occur.

 

    • Visit the IRS website to see how long you should keep tax returns and other documents.
    • Save your paystubs for the year until you receive your W-2 form for comparison.
    • Visit bankrate.com for a timeline for keeping other financial records.
    • Save warranties as long as they are valid or until you no longer have the item.
    • Manuals can often be found online now eliminating the need to keep them around.

Now that you have taken the steps to organize your financial records, you are now ready to begin tracking your spending, establish a spending and saving plan, and manage your debt.

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