This is the time of year to get your finances organized! That
way you can have a plan for the year, and can get ready to prepare your tax
returns. This is not an article on how
to save money, or where the best place is to invest your fortunes. Before we
can think about heading in those directions, we need to know where and what our
current finances are. Here are some tips
on getting your finances organized.
Where is my Current Money? Jot down where all of your accounts are and their current balances. These accounts include savings, retirement, trusts, loans, credit cards, mortgages and medical debt. Share this information with your spouse or another responsible family member. Then if something happens to you, someone else knows where your finances stand.
What is my Monthly Income? When tallying your income, remember to account for dependent care reimbursements, child support, social security, rental income and your income from your job. I like to think about my income after benefits and tax income (the income that is available to live on). This helps to put in prospective what I have to spend.
Make a Plan Reflect on the last year or the last month. What where your expenses? Be honest. Then you can look forward to what expenses you will have in the coming year. Be honest. If medical expenses were $5,000 last year, will they be similar this year?
Divide Your Money
into these Four Categories:
Fixed –These are the monthly expenses that are probably not going to change. They may include housing, utilities, medical, food, tuition, etc.
Philanthropy – This is the money you plan to give each month. This can include religious contributions, charitable giving, capital campaign commitments and pop up fundraisers (think neighbor kid raising money for the class trip to Washington DC, or the Scout selling wreaths).
Future – This is where you plan for your and your family’s future. This may include retirement, savings, college savings, etc.
Fun – This is the category that we all live for. This could include traveling, movies, sporting events, dinner out, golfing, gym memberships, a photography class, and so on.
Simplify Your Spending Consider using a cash only system or using one standard credit card for your purchases. This makes tracking your spending (and debt) simplified by having one platform to review your spending. Knowing where all your money is and where your money will go, will help you to get a grasp on getting your money organized. There are great apps available to assist you with budgeting and tracking where your money goes. Mint, Wally and NYAB are popular apps that are user friendly.
Organizing your money will help you to make better decisions when unexpended expenses or fun opportunities are presented to you.
An organizer can help you determine where your money is and detail where your money will go. See if Top Shelf Home Organizing can help you on your journey. Contact Jayme to schedule a consult or chat about organizing.
Unmanaged paperwork around your home and office can be quite stressful. Searching for important documents may seem hopeless. Interest charges and late fees can pile up quickly on misplaced bills. Deadlines are easily overlooked. Getting on top of your papers and developing a good paper management system will reduce your stress.
Choose a Convenient Location Where you manage your paperwork should be convenient. Going to a secluded area of your home may not encourage you to manage your paperwork. If it is not an area you enjoy being in, you won’t go there.
The workspace should have ample surface area, basic office supplies (envelopes, pens, address label), computer and printer, paper recycle bin and paper shredder.
Remove the Unnecessary, Immediately Sort your mail as soon as it comes in with a recycle bin and shredder within in arm’s reach. Junk mail should be recycled immediately. Refer to the document retention guideline for guidance on what documents to keep and for how long.
Do Initial Sorting Create a temporary, simple filing system for the initial sorting of your paperwork. This file system could include files labeled:
File – for files to be filed
Pay – for bills to be paid
To Do – for items that require attention within the next month
Read – for documents that will required your dedicated attention
Regularly go through and Pay, Sort and File Set up a weekly time to go through the temporary files. Coordinate your bill paying with your pay dates. File papers from the ‘file’ file. Review your ‘to do’ file for items needing attention within the next week. Take some time read through the files from your ‘read’ file.
Choose Physical or Electronic Files Decide if you prefer physical or electronic files. It’s nearly impossible to completely do one or the other, but designating one or the other as your filing system will help to manage your paperwork.
It is important to always be aware of what papers, documents and receipts enter your home. Receipts can be sent via email or not retained at all. Be selective of what documents are collected at trade shows, conventions and seminars. Only accept the documents that are relevant to you. Be mindful of the mailing lists, marketing emails and promotional lists you sign up for.
Once your paperwork system is set up, plan to set aside time every week to maintain and manage your paperwork. Staying on top of your system will reduce stress and ensure you keep on top of your work and bills.
If setting up a paperwork management system is overwhelming for you, a professional organizer can help. Contact Jayme with Top Shelf Home Organizing for a consultation to see how we can help.
Are your filing drawers overflowing? Do you have several stacks of paper documents with no idea as to which you need and which belong in the trash? Are you overly concerned that the IRS will come knocking at your door and you won’t have something you need? Your stress is over. This checklist on how long to keep all your financial and other important documents will help guide you!
Documents to Keep Forever
Income tax returns
CPA audit reports
Deeds, mortgages and bills of sale
Legal documents (wills, living wills, power of attorney designation, medical and burial instructions, beneficiary documents)
Vital records (birth, death, marriage, divorce, adoption)
Investment trade confirmations and statements that indicate buying and selling, retirement and pension records, year-end statement for investments
Trust documents
Receipts for warranties
Automobile titles
Current insurance policies
Medical records
Education records
Important correspondence
Property records (keep until sale of property)
Car records (keep until sale of car)
Insurance policies (keep for life of policy)
Documents to Keep for 7 Years
The IRS may go back 7 years to audit your tax returns for errors or incorrectly claimed deductions – so it’s important that you keep all tax-related documents for that length of time.
Bank records
W-2 and 1099 forms
Receipts for tax purposes
Personnel and payroll records
Cancelled checks
Disability records
Unemployment benefit records
Settled accident claims
Mortgages, deeds, leases on sold property
Records on sold stocks and bonds
Documents to Keep for 1 Year
It’s rare that anyone is going to want to see an electric bill or credit card statement dating back more than a year. But you may choose to keep the following NON-TAX-RELATED papers:
Checkbook ledgers
Paycheck stubs (keep until reconciled with W-2)
Monthly financial statements
Monthly mortgage statements
Credit card statements
Utility records
Medical bills (in case of insurance disputes)
Documents to Keep Less Than 1 Year
There are always those papers that don’t fit into any of these categories. Retain these records according to the following guidelines:
Credit card receipts (keep until reconciled on your credit card statement)
ATM and deposit slips (keep until reconciled on your bank statement)
Bills (keep until the payment verified on the next bill)
Now, it’s time to simplify!
Now that you know the guidelines on how long to keep all of your documents, it’s time to get organized. Start cleaning out those file cabinets or sorting through those paper stacks that are taking up space and causing you stress.
*NOTE: This checklist is a guideline. Please be sure to consult your accountant and/or the IRS for the most up-to-date rules.
If you don’t have the time to get your business and personal documents organized, Top Shelf Home Organizing would love to help. Call Jayme: 262-373-9416.
