Be Organized So You Can Better Maintain Your Financial Records

Organize your financial records

A key part of managing your personal finances is making sure that your financial records are well organized. Whether it is a Social Security card for purposes of wage reporting or utility bills to show proof residency, there may be times when you need to quickly locate a financial document or record.

You do not want to keep your records like Peter Le Fleur did in Dodgeball! That is not impressive!

By taking the time to tidy up and organize your financial records, you will be able to find exactly what you need exactly when you need it.

What Documents should You Keep?

Are you the type who keeps stuff because you never know when you might need it? Your home office or desk is probably overflowing with documents that you do not need or your closet like Peter Le Fleur’s closet! One of the first things you need to ask is “Why do I need to keep this?” – this will help you determine what records to keep.

You should keep documents that are difficult to obtain, like:

  • Proof of identity
  • Insurance claims
  • Legal contracts
  • Tax returns

On the other hand, if you have documents that you can duplicate easily, such as credit card and online banking statements, you probably do not need to keep hard copies since that will add up year after year.

How Long should You Keep Your Records?

Generally, you should keep your financial documents and records only for as long as necessary. For example, credit-card and ATM receipts should be kept only temporarily, until they have been reconciled with your credit-card and/or bank statement. On the other hand, if a document is difficult to replace and/or legal in nature, you may want to keep it for a longer period or even for an indefinite period. And not wide out in the open either; file it away in your office desk, closet, or even safe.

There may be more specific timetables for some financial records. For example, it is generally recommended by the IRS that taxpayers maintain federal tax returns and the documents that support them for at least 3 years up to 7 years from the date of filing. There may be certain circumstances that warrant keeping your tax records for an indefinite period of time as somewhat insinuated above.

Here is a list of some recommendations for the time period you should keep specific documents:

Records to Keep for 1 Year or Less

  • Bank or credit union statements
  • Homeowners and auto insurance policies
  • Utility bills
  • Credit card statements

Records to Keep for Over a Year

  • Mortgage contracts
  • Tax returns and supporting documents
  • Property appraisals
  • Receipts for home improvements and major purchases
  • Annual investment and retirement statements

Records to Keep for an Indefinite Period

  • Social security card
  • Birth, death, and marriage certificates
  • Citizenship and military discharge documents (DD-214 for those exiting the military)
  • Adoption records

Keep in mind that these are general guidelines. Based on your personal circumstances, you may need to keep these documents for longer or shorter periods of time.

Where should You Keep Your Records?

You could use a set of labeled folders for your financial records and keep them in a file drawer. However, for more critical documents, it may be better to keep the folders in a fire-resistant safe (as somewhat mentioned already as well), file cabinet, or safe-deposit box.

If your space is tight and you need to make sure that there is minimal clutter, electronic storage for some financial records may be a stellar idea (certainly for some financial tax documents). Online documents can be saved and you can scan documents to convert them into a digital version of themselves. Backup copies should be kept on a portable hard drive or a storage device (USB for instance). You should also make sure that your computer files are properly secured.

Another option is a cloud storage service. Your loaded information gets encrypted and stored remotely. Make sure that you use a reliable company if you are learning towards cloud storage – pick a solid company that offers technical support and automatic backup.

Once you have found a place to store your financial records, organizing and storing them according to specific categories – e.g., proof of identity, banking, etc. – may be helpful since it will make it easier for you to access your records when you need to.

Remember that your financial records are important documents that need to be properly maintained. You never know when you might need them. Keep the tips mentioned above in mind and make sure that your financial records are safe, secure, and easily accessible whenever you need them.




What is Personal Finance?

Personal finance is a very broad term and pertains to financial activities and decisions that an individual or a household undertakes to manage earnings and expenditures in a balanced way. The ultimate goal of personal finance is to secure the financial freedom of a person or a family using various financial tools.

These includes record keeping, savings, insurance, credit planning, retirement planning, and finally estate management. To understand personal finance, each of the above-mentioned personal finance tools needs to be understood.

How America Fares in Personal Finance?

According to Gallup, just 32 percent of households in the country budget their earnings. Out of a 300+ million population, only 30 percent of 90 million+ people have savings and financial goals. Those are not stellar numbers. It gets worse from here. As per a CNN report, 76 percent Americans live paycheck-to-paycheck and less than a month’s income is kept aside as an emergency fund. What does this say about the economy for the past several years? Not impressive! What does this say about our educational system that does not teach students about budgeting? Not impressive either!

This can change if you manage your finances in a smart way, continue reading to know how.

Record Keeping and Budgeting

Record keeping is the most fundamental aspect of personal finance. While some people like to keep track of every cent they earn and spend on a day-to-day basis, most just do it every week or month. The underlying principle of record keeping is to keep track of your earnings and expenditures. This, in turn, helps in allocating budget for necessities and avoid unnecessary expenses.

Tracking your earnings and expenses regularly also enables you to estimate your future income and upcoming expenses. Years ago, record keeping was a tedious task as all records had to be kept in a record keeping book. With computers and smartphones, most of the tasks now can be automated with minimal work to be done on your part. Record keeping and budgeting should always go hand-in-hand for salient results.

You do not want to keep your records like Peter La Fleur (Vince Vaughn) did in the movie Dodgeball! Not impressive!

Tax Planning

You cannot escape taxes. However, you can minimize the tax burden by making smart financial decisions. A Certified Public Accountant (CPA) can maintain accounts and do tax planning for you, but relying solely on your CPA is not recommended.


The key to financial success lies in maximizing your income. Savings in the form of cash or Certificate of Deposit (CDs) is just a safety net in times of financial crisis; the real financial freedom comes only when you invest your money wisely and earn more from it. Thus, in personal finance, the need for understanding various investment avenues for individuals and families arises.

Government departments and private organizations offer a plethora of financial products that can be used for making investments and growing your money. However, all these decisions have to be made depending on your current net worth, future earnings and expenditures, and risk appetite.

If you want to learn a little about risk, go watch Along Came Polly which is an OK comedy with Ben Stiller. His character Reuben Feffer knew all about risk!

Credit Planning

Any form of legal debt including mortgage, home-equity loan, credit card debt, student loans, and personal loans come under credit planning. The golden rule is to stay away from debt. However, that is hardly possible in today’s consumerist world. The cautious approach thus is to borrow within your means. Investing or splurging with borrowed money is the worst financial sin one can commit.

In personal finance, you learn how to manage your debts so that your interest payments on debts is minimal. For instance, knowing that putting in 20 percent down payment while buying a home will result in lower mortgage interest rates. This results in thousands of dollars or savings over the years.

Insurance Coverage

Insurance is for protecting your financial interests against uncertainties. A serious health condition can wipe out your entire life’s savings or engaging in extreme activities like Leland Van Lew enjoyed doing in Along Came Polly!

A fire can destroy your dream home. In the worst case, if something happens to you, your dependents will be left to fend for themselves. However, as insurance products are complex financial planning instruments, learning a bit about them and making smart purchases will help you in staying stress-free even in times of uncertainties.

Retirement Planning

One day you will stop working and so the income you have been earning will dry up. If you have practiced smart retirement planning, you can enjoy the golden years of life without having to worry about day-to-day expenses or any medical expenses. Retirement planning ideally should start somewhere around the age of 25, but if you have not, some tools and products will help you achieve these retirement’s financial goals. It is easy to get overwhelmed with IRAs and other retirement products. A little bit of financial knowledge, however, can ease this process.

Estate Planning

Just like taxes, death too is certain. All inheritances are taxed (though Trump may change that!). Moreover, if the will for your successors is absent or not drafted properly, it might lead to infighting among them. Estate planning thus is the last, but not the least important aspect of personal financial planning.

As stated earlier, personal finance is too vast to be covered in a single article. The key is to understand a little bit of everything. You can hire someone to do this for you, but if you are aware of the basics of personal financial planning, it will save you lot of time and money.