GETTING YOUR FINANCIAL RECORDS STRAIGHT

Ever tear your bedroom apart looking for your birth certificate, sure that you had safely stored it in your sock drawer?  Or pulled an all-nighter on April 14 preparing your tax return because you spent the previous three days searching for documents and receipts?  I am guessing that at least some of you are all too familiar with those frustrations.

I’ve found that people with unorganized or incomplete financial records generally fall into two camps.  The first are those that save every piece of paper they receive and shove it in the first drawer or shoe box that comes along.  The second are those that arbitrarily keep some papers and throw out others based on nothing more scientific than their mood at the moment.  But whether you’re a pack rat or laissez faire filer, you’ll be left scrambling when you actually need to find an important document.

Within this category of my Blog, I hope I can help you take control of your financial records. Besides saving you time and frustration, an organized financial recordkeeping system pays off in numerous ways:

• First, organized records will make your tax-preparation easier and less time consuming.  Keeping thorough tax records throughout the year may also remind you of tax deductions you might otherwise overlook.  And if the IRS ever questions your return, adequate back-up documentation may help you avoid interest charges, penalties, or additional taxes.
• Second, good records will give you a better handle on your overall financial position and help your Accountant identify financial and tax-planning opportunities.
• And lastly, should you die or become incapacitated, a well-organized financial filing system will ease the burden on your loved ones by providing a road map to your financial affairs.

Now comes the hard part.  How do you go about sorting that mound of paperwork staring you in the face?  Exactly what records do you need to keep and how long do you have to hold on to them?  Which documents can be trashed or moved to your recycling pile?

I hope to answer some of those questions for you .  I am going to break down my discussions by six general subject areas, namely taxes, banking, investments, retirement plans, insurance policies, and your home.  Of course, your own personal circumstances will dictate how you organize your files.  But these six categories are universal to most of us and can cause the biggest headaches when your records are sloppy or incomplete.