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Organizing Your Financial Documents

Organizing Your Financial Documents

If you are really serious about gaining control of your financial life, your two best investments could be a cross-cut shredder and a scanner, both of which can be purchased for a total of $100. Document clutter and disorganization is one of the primary causes of procrastination because of the added workload and inefficiency of shuffling through growing mounds of paper. The next thing you know is that you’ve lost control of your finances, bill payments are missed and budgets are blown. You can completely organize your financial documents this afternoon and sleep much more soundly tonight by taking these three steps:

Store long-term documents: These documents should be stored in a secure location, either a home safe or a safe deposit box.

  • All government documents such as birth certificates, passports and Social Security identification
  • Insurance policies
  • Last seven years of tax documents including returns and support documents.
  • Ownership title documents.

Documents to scan to computer: Once a month, scan these documents to folders on your computer. It would be important to subscribe to an online backup service such as Mozy.com ($6 a month), or back up your folders to a CD or memory stick.

  • Paycheck stubs – should be maintained until your employer provides you with your W-2
  • Receipts – especially for large purchases such as appliances, furniture, and jewelry in case you need to file an insurance claim.
  • Medical documents – for insurance and tax purposes.
  • Investment statements – unless you receive them online. Important for tax purposes.

Feed documents to the shredder: Everything else can be destroyed as soon as you review them for accuracy.

  • Bank and credit card account statements – you should switch to paperless statements if you can.
  • Bills (utilities, misc) – Many utilities offer paperless billing as well.

As you receive new documents, separate them into three piles: Store, scan, shred

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