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Keeping (and Organizing!) Your Financial Records

January 22, 2020

An important part of "Financial Wellness" is keeping track of your financial records - tax returns, bank statements, contracts, insurance papers, credit card information - the sheer volume can feel overwhelming. Just like budgeting, the best system is one you'll use.

First, get a safe deposit box or a fireproof safe. This is for super important items you don't want to lose, like your birth certificate, marriage license, passport, car title, stock/bond certificates, social security card, and important personal items (photo negatives, jewelry, etc). These are items you don't necessarily need to access often, and are often difficult - if not impossible - to replace. In addition, invest in a paper shredder and use it for all financial documents before you throw them away.

Financial Recordkeeping Options

Now that you've taken care of protecting these important items, what do you do with day-to-day stuff? The answer to that is another question- how much time do you want to spend on these items?

If you know you'll quickly lose interest, then Keep It Simple! Take a photo of your license and the front and back of your debit/credit cards. Sign up for e-Statements immediately! Request budget billing from your utility providers, and set up monthly automatic payments in online banking. Contact lenders to set up auto debit for your loan payments.  Install your bank's mobile banking app and learn how to use it. (Even if you don't use it regularly, it will give you easy access to a lot of bank information.) Take photos of every page of important documents, or even better, scan them so you can access an electronic copy easily.

If you're confident you'll maintain a more involved system, take the Keep It Simple system a step further. Invest in some file folders (many people like to use color-coded folders) or an accordion folder. Use these to keep hard copies of important documents, though it's still a good idea to keep an electronic copy if possible. What should you keep? Here's a pretty comprehensive list, but don't let it overwhelm you. You can pick and choose, keeping in mind that your system doesn't have to be textbook perfect.

Advisors - Maintain a list of your financial advisors, along with their contact information.
Auto - Titles and maintenance records for any vehicles.
Bank Accounts - Some like to keep a hard copy of their monthly statements. This is a good place to keep a list of all your accounts.
Bills - Some people like to keep hard copies of their bills, at least until the bill has been paid.
Contracts - Have access to any contracts, including marriage licenses or divorce decrees, leases, employment contracts, etc.
Credit - Keep a copy of your annual credit report, along with statements that include the purchase of items that are covered by your credit card company's warranty program. Keep a copy of the front and back of your credit cards.
Education - It's a good idea to keep your enrollment records, diplomas, transcripts, etc.
Employment - This is for copies of your paycheck stubs, performance reviews, letters of recommendation, and your resume.

Healthcare - Keep medical records, vaccination records, and medical receipts.
Home Repair/Maintenance
- Records and receipts for home maintenance (i.e. yearly furnace check, bathroom remodel, etc.)
Insurance - Copies of any insurance policies you have - auto, home/renters, life, health.
Investments - Brokerage account records, investment account statements, retirement plan information - any investments you have.
Loans - Information about any loans, including a copy of the documentation.
Receipts - File any receipt you might need for taxes, warranties, etc.
Tax Records - 1099s, W2s, charitable contribution receipts and copies of tax returns for at least three years.
Utilities - A list, and even statements, of all utility providers, including cable and internet.
Warranties - Keep copies of your warranties, especially for larger ticket items.
Wills, Trusts, and Estate Planning - Your current estate-planning documents, along with a list of beneficiary designations.

A word of caution about paper files - be sure to keep this information in a secure area! In addition, be sure you back up this information, whether it's hard copies you keep in your safe deposit box or fire-proof safe, or electronic copies stored on thumb drives, on your phone, or using cloud storage. Don't forget to update your backups!

Research shows that eliminating friction - making actions as painless as possible - is the key to establishing new habits. Taking advantage of e-Services (from all companies, not just your bank) allows you to remove a lot of the friction that might prevent you from keeping financial records the way you should.

In addition, don't let perfection get in the way of organizing your finances. If you set up a complicated system that covers every possible scenario, but don't maintain it, then the system isn't actually a good one.

Finally, stick with it! If you need to make adjustments, make them. If you start out with 20 folders, cut the number to 15, or 10, or 5. If you miss filing papers for a month, file them the next month. (Keeping all of your papers in one location will help.) The longer you stick with your program, the more of a habit it will be, and the more successful you'll be.

The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.