Good record-keeping can save you headaches and money. The perfect time to start
a new plan is with a new year. So here are some tips to get—and keep—your financial
house in order:
An accordion-type file or a drawer full of manila folders will keep things
sorted. Keep separate files for investment statements, credit-card bills, warranties,
and the like. Thus, you can see if something is missing, and you can find anything
What to save and how long?
Many people are confused about what documentation should be saved and for
Keep all federal tax returns and supporting documents for
at least six years. The Internal Revenue Service generally has three years after
your return is filed to assess tax. If you file a fraudulent tax return, the
IRS can come after you at any time.
It is important to retain trade-confirmation notices you
receive from the stockbroker or mutual fund when you buy or sell securities
so you can calculate capital gains or losses.
Also, keep the invoices from any improvements you made to
your farm or home. When you sell, you can reduce the tax due on your profit
by adding in the cost of any permanent home improvements, such as those incurred
to update kitchens or bathrooms, to your “basis.”
Saving important documents
Homes burn down, get swept away by floods, and are destroyed by tornadoes.
With these disasters can come the added annoyance of losing important and often
To avoid a double disaster, experts recommend that families
keep birth certificates, property deeds, and insurance policies in a safety-deposit
box at a bank. Photocopies should be kept at home.
However, a will, which needs to be readily accessible to
the executor of an estate, is best kept with the family attorney.
Jeanne Salvatore, vice president for consumer affairs at
the Insurance Information Institute in New York, cautions that the contents
of safety-deposit boxes are not insured by banks or other financial institutions,
but families can get protection for valuables in their safe boxes at home with
“riders” on their homeowners’ or renters’ insurance policies.
Because computers have become so much a part of daily life,
Brent Neiser of the National Endowment for Financial Education says an increasing
number of families are storing backup copies of their computer disks in their
safe boxes. He also suggests that families do a household inventory with a video
camera and store the videotape should they need to provide documentation for
an insurance claim.
Try to keep all these records in one place and make certain
that a family member or friend knows the exact location. You also may wish to
provide that person with the log-on instructions for accessing personal or financial
files in your computer, if you have one.
However, neither filing paperwork nor weeding out files will
decrease the flow of paper into your home. To do that, you have to look to the
source of those papers. So, consider consolidating bank and brokerage accounts
and limiting the number of institutions with which you do business.
Stephanie Winston, considered the nation’s leading expert on self-organizing
strategies, has some other suggestions on how to work smarter, faster, and
For example, use bulletin boards for reference papers, such
as kids’ schedules, inspirational sayings, and favorite take-out menus. But
keep important papers in the proper file or an “action” stack, where they can’t
She also says it’s money well-spent to hire people who save
you time. Take advantage of messenger, pickup, and delivery services and travel
agents for booking vacations.
A way to put an end to so-called telephone tag: leave messages
that ask for specific responses, instead of vague requests to call you back.
If you are not beside the phone when the call is returned, the caller can still
provide the information you need—on the answering machine.