5 Easy Steps to Better Financial Organization

There is nothing worse than trying to find your unpaid bills in a crumpled mass of paperwork or sorting through a year’s worth of receipts all at once. Us folks at Financial Help Edmonton want you to know that by following these 5 simple steps to better financial organization you are setting yourself up to be more financially healthy. Having your paperwork organized makes following a budget easier and doing your taxes a breeze, not to mention you’ll never lay awake at night wondering if you paid your last cable bill.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

5 Easy Steps to Better Financial Organization

Step One: Decide on a method

Having bills, receipts and invoices scattered throughout the house is not entirely conducive to overall financial health. Paying your bills on time does require the ability to find them! So whether you have a home office or a nook in the kitchen for filing, decide on your ideal spot to keep all paperwork and devise a method of organization. How you choose to organize things is up to you, the crucial part is to stick to it! There is no point in purchasing fancy office organizers if you fail to put anything in them.

Step Two: How do you like to pay bills?

We all have different preferences when it comes to paying our bills, so how do you like to pay them? Online? As soon as you open the mail? Or do you wait until the last minute because you are still waiting for that pay check? Either way, take your bill payment style into consideration. If you schedule automatic payments online it won’t make sense for you to set up a bill filing system. However, if you do need to coordinate due dates with pay day we recommend setting up a filing system. The simplest way is to have two inboxes set up according to the dates you get paid, place the appropriate bills in each box and once they are paid file them away. How easy is that?

Step Three: Keep only the essentials

Here is good timeline from MarthaStewart.com for how long you should be hanging on to your paperwork:

Auto Records

  • Only while Active
  • Keep these documents for as long as you own the vehicle, but old on to sales-transaction records for six years after the car is sold or traded.

Insurance Policies

  • Only while Active
  • After you receive the updated policy, shred the old one.

Warranties and Contracts

  • Only while Active
  • Toss them as soon as they expire.

Paid Bills

  • Only while Active
  • After you receive a canceled check or a credit or bank statement, most bills and receipts can be shredded. For insured purchases, keep paperwork as long as you own the item.

Paycheck Stubs

  • One Year
  • Hold on to these until you’ve checked that the T-4 or ROE (Record of Employment) from your employer is correct.

Quarterly Investment Records

  • One Year
  • Shred after you confirm the amounts on the annual statement.

Credit Card and Bank Statements

  • Seven Years
  • These can serve as proof if you file an insurance claim and as backup for tax documentation.

Receipts and Documentation for Tax-Deductible Purchases

  • Indefinitely

Tax Returns

  • Indefinitely
  • These are useful references for checking income or medical claims from a particular year.

House-Related Records

  • Indefinitely
  • Save documents pertaining to closings, deeds, assessments, and home-improvement expenses.

Annual Investment Statements

  • Indefinitely
  • Retain these until you sell the securities. Keep the record of that transaction indefinitely.
Image courtesy of patpitchaya / FreeDigitalPhotos.net

Image courtesy of patpitchaya / FreeDigitalPhotos.net

 

Step 4: Not every receipt counts

Many of us hang on to every single, little receipt which simply adds to the pile-up of paperwork. At the end of the day, you should only be keeping receipts for big-ticket purchases, tax deductibles, medical expenses, home-improvements expenses, etc. The receipt for that gossip magazine and gum you bought today are just clutter.

Step 5: Protect the important things

The biggest reason we keep records and paperwork around is because we might need it at some point down the road. We should all take extra care to organize the essentials, the paperwork you cannot live without. According to MarthaStewart.com, “there are a few documents that should be stored separately — and indefinitely — including medical bills and claims, tax returns, investment records (such as year-end statements for retirement accounts), anything pertaining to property and valuables (including mortgage contracts and assessments), and legal documents (such as wills and those pertaining to estate planning). Make copies of these and other irreplaceable documents, including deeds, titles, stock and bond certificates, and certificates of deposit, and store the originals in a fire-resistant safe or a safe-deposit box.”

Have more questions about organization and your financial health? Let us know – we’d love to help!

 

Source: http://www.marthastewart.com/264234/organizing-your-paperwork

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