Spring-Cleaning: How to Organize Your Finances

Many adults have lost money due to poor financial organization and do not even realize it. For example, millions of people have unknowingly lost track of their (or a relative’s) pension documents over the years, which has left over $300 million in unclaimed pension benefits. Maintaining organized financial files can save you money and time, and it is an important habit to develop as you get older and your finances get more complicated.

People usually lose track of their financial documents because they have too much financial paper work that is kept in no particular order. There are many ways that you can avoid repeated costs of disorganization.

-       Collect all your life documents and back them up – Life documents include birth certificates, marriage licenses and divorce decrees, life insurance policies, and wills. Keep these documents forever, as they can affect your and your relatives’ financial situations well into the future. Gather and store them in a secure place. Back up these documents by scanning and uploading them onto a password-protected Flash drive or a Cloud account. Keep the Flash drive in a safe deposit box for extra safety. But never shred these original documents!

-       Go “paperless” to avoid the trouble of searching through files – Many companies can send your bills electronically. You can download the documents into computer files. Organize the computer files by type and date, and password-protect them.

-       Routinely shred documents that you do not need anymore. This will keep you from losing track of your more important papers, such as recent bills. This table shows what items you can dispose of and how often:

Item	When to discard	Shred it?
Tax documents (W-2s, 1098s, 1099s, etc.)	After 7 years	Yes
Pay stubs	After 1 year	Yes
Bank statements	After 1 year	Yes
Bills	After 1 year	Yes
Credit card statements	After 45 days	Yes
Warranties / product manuals	When you no longer own the product	No
Life documents (birth certificates, wills, insurance policies)	NEVER	No. Always keep in a secure, easy-to-find place.

READERS, what do you think?

Were you aware of all the documents you need to be keeping? Where have you kept important documents so far? Are you able to find warranties (on your cell phone, for instance), proof of insurance (in case you are stopped by a police officer), or your car title (which you will need when it is time to trade for a newer car)? And where do you keep your checks? Would having an organizational system help?

References:

Intuit, Inc. (2014, February 28). How to spring clean your finances: A visual guide to getting your financial house in order. Mintlife. Retrieved from https://www.mint.com/blog/how-to/how-to-spring-clean-your-fianances-a-visual-guide-to-getting-your-financial-house-in-order-0214/?display=wide.

Haithcock, S. (2013, April 9). Finding lost money is real; billions unclaimed. MarketWatch, Wall Street Journal. Retrieved from http://www.marketwatch.com/story/finding-lost-money-is-real-billions-unclaimed-2013-04-09?pagenumber=1.