Your Money
Give your family
the gift of peace of mind
Will your family know where to find important information if you’re not able to? Organizing your financial records is a valuable way to save yourself time and money...and to give your family the special gift of peace of mind.
Begin by creating a home filing system that works for you. And don’t forget a safe deposit box for documents that are important and hard to replace.
1. Home
When you buy a home, start a file right away that includes all the paperwork involved in the purchase. Keep an inventory of items such as TVs, refrigerators, lawn mowers, etc., with purchase prices, model numbers, and warranties.
To protect your investment, keep records of all the improvements you make to your home, such as siding, roof, and windows.
2. Current Bills
You don’t want to forget to pay a bill because you misplaced it. Have a file for all current bills until they’re paid. Then transfer them to a more permanent area for tax review. Or consider online automatic bill payment.
3. Tax Documents
To make life easier at tax time, keep everything you’ll need to prepare your next tax return, including:
- W-2 and 1099 forms
- Charitable donation receipts
- Receipts and cancelled checks that support allowable deductions
“Organizing your tax information saves so much time. Start a new file each year just for tax information,” said Xin Liu, Actuary and Chartered Financial Analyst, Royal Neighbors of America. “Then put in the file all your receipts throughout the year – property tax payments, child care accounts, medical bills, stock investments, expense reports, and charitable donation receipts. You’ll be prepared to file your taxes with all your information close at hand, and you’ll be ready if the IRS has questions. Your family will benefit, too, if you’re not available to file on your own.”
4. Bank Records
File checking and saving statements separately. Go through your checks each year and keep those related to:
- Allowable tax deductions
- Business expenses
- Home improvements
- Mortgage payments
Shred those with no long-term importance.
5. Insurance Policies
Maintain copies of all current insurance policies, including companies, policy numbers, amount of coverage, beneficiaries, and agents’ names. You and your family will appreciate your organization if a claim has to be filed.
6. Retirement Plans
Keep a file of information about your Individual Retirement Accounts, 401(k) plans, and employee pension plans.
Maintaining your records
After you have your important information organized, it should be easy to maintain. Begin the habit of regularly going through paperwork that is no longer relevant. Also, take stock each year and discard outdated information (see below) that adds to the clutter.
It’s important to keep a notebook explaining your recordkeeping system in a place away from your filing cabinet. Give a copy of the notebook to a relative, trusted friend, or attorney in case of emergency. Or, tell them where to find it.
Follow these guidelines to organize your records
Discard:
- Most cancelled checks more than a year old
- Outdated insurance policies
- Information about items you no longer own
- Paycheck stubs after one year (after you’ve matched them with your W-2 form)
- Credit card bills more than a year old (or up to seven years if tax-related expenses are documented)
Move to storage:
- Tax returns for at least seven years
- Military records
- Records for non-deductible IRA contributions
- Information on former employers’ pension plans
- Death certificates after the estate has been settled
Keep in a safe deposit box:
- Birth, adoption, marriage, citizenship, divorce, and death certificates
- Your signed, original will
- Your Social Security card
- Contracts and other legal papers
- Stock and bond certificates
- Deeds and records of ownership
- Pictures of furniture and other valuables to assess the value of the contents of your home
- Valuables (coins, stamps, jewelry, etc.)
- Passport
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Send an email to request a free copy of Royal Neighbors' Personal Record Book.
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