Vol. XIII, No. 6

April 2005

 

 

Personal Recordkeeping

 

 

INTRODUCTION

In addition to your school paperwork, your personal financial paperwork may be piling up.  What is the best way to organize all those papers?  What should you keep and what can you discard?  This Financial Awareness Bulletin provides an overview of how to organize and what to keep.

 

KEEP THE RECORD STRAIGHT

Personal documents, household records and important legal papers accumulate continually.  A recordkeeping system will help you organize the important records concerning your household financial affairs and keep track of your personal finances and hard-to-replace documents.  Another benefit to having all of your tax records and documents in a designated place is you can efficiently prepare your tax returns.

Recordkeeping can help you save time and money while giving you peace of mind.  Keeping orderly records will help you locate payment documentation when required, such as to prove payment of child support or medical bills to insurance companies, or to obtain warranty coverage.  You can also document losses for fire damage or theft for insurance claims. 

Setting up a recordkeeping system involves three steps:

I.         Gather and organize financial records.

II.       Decide where each type of record should be kept -- in a home file or safe deposit box.

III.      Review and discard unneeded paperwork.

 

I.    Organize Financial Information

Organizing important personal records will make money management easier for you and for others who may be responsible for handling your financial affairs.  When you organize financial papers, the first step is to locate all of the documents and related information such as phone and account numbers.  Gather information in categories such as:

§         Legal.  Wills, living wills, powers of attorney, donor information, estate planning documents, death certificates, adoption papers, citizenship papers, military service records, and Social Security cards.

§         Medical.  Physician and dentist information, current prescriptions, allergy information, doctor/hospital bills, insurance cards.

§         Life & Health.  Copies of policies for term life, whole life, employer-provided health care, individual health care, Medicare, and Medicaid.

§         Auto/Home.  Copies of policies for auto casualty/liability, personal property, declaration sheets, homeowners/renters, claim records/numbers, agent information, flood/earthquake.

§         Banking.  Bank accounts, check registers, bank locations/contact names, safe deposit box numbers/keys, money market accounts, certificate of deposits.

§         Retirement.  State pensions, annuities (403b), individual retirement accounts, stocks/mutual funds, government bonds, Social Security payments, total assets.

§         Personal Expenses.  Store charge cards, bank credit/debit cards, school/auto loans, closed account confirmation letters, rent payments, warranties.

§         Personal Valuables.  Certificates, appraisals, and photographs of antiques, jewelry, art/photographs, family heirlooms, rare books, recordings, china/crystal, other collections.

§         Real Estate.  Architectural drawings/floor plans, deeds, block/lot numbers, home/termite inspections, mortgages/contracts, land surveys, title insurance, tax assessments.

§         Titles and Certificates.  Property/vehicle titles, birth/marriage certificates, passports, legalization papers, children’s documents, pet licenses.

 

II.   Where to Store Financial Records

Financial records can be kept either in a home file or in a safe-deposit box at a financial institution.  Active records (those used on a regular basis) and those of limited value can be kept in a home file.  Select a convenient place such as in the kitchen or home office area to keep important household financial documents.  A file cabinet that is fire and water resistant makes good sense.  Or you can simply use an inexpensive cardboard box that holds file folders.  Keep it handy, where it can be accessed easily, probably not on the top shelf of the closet.  Consider using a safe-deposit box to store records that would be difficult to replace (such as those in the following categories: Legal, Personal Valuables, and Titles and Certificates). 

At least one other person should know where your important records are kept and how they are organized, so in an emergency that person can locate information quickly.  A logical place to keep this information would be at the front of the active files.  The information should include a list of items in the safe-deposit box and where the key is located.

 

III.  Review and Discard Unneeded Records

You will accumulate many financial papers over time, so it is important to know which to keep and for how long.  You should keep the following documents:

§         3 Years: Household bills (paid and unpaid); receipts for minor purchases; health records; and income tax receipts.

§         7 Years: Cancelled checks; check registers; bank statements; bank deposit slips; year-end pay stubs; credit-card statements; receipts and records of deductible expenses; income and tax paperwork (some financial advisors suggest that you keep a copy of your tax returns with documentation for at least 10 years).  In addition, investment purchase and sale records should be kept for seven years after the tax deadline for the year of sale.

§         Permanently: Personal records that provide documentation of events such as birth, marriage, divorce, death, military service, adoption, naturalization and medical records.  Also, housing and investment records such as titles, deeds, trust agreements, wills, retirement plan agreements, and power of attorney documents should be kept as long as the agreements are in effect.  For tax purposes, papers documenting home purchase and improvements should be kept as long as your own the property or are rolling over profits into new property.

For those records that you decide to discard, it’s in your best interest to shred them.  You can purchase a shredder at most office supply or discount retailers.  Make sure the shredder is a “cross-cut” model and has a credit card slot.

 

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