Mastering your financial world is a helluvalot easier when you have your documents arranged in an orderly fashion with all the information you need at your fingertips. By having a system for filing, retaining, and eliminating documents, you'll save yourself a great deal of time and trouble.
Over the years, we've developed a very handy system that will help you stay on top of your financial documents and your financial world. It uses a pair of the most important principles of organization, and it's only two steps. Here it is:
Step 1: Keep or Destroy. When a financial document arrives by mail, email, or app notification, immediately decide whether to keep or destroy it. Keep it by filing it in the appropriate paper or digital folder. Destroy it by shredding or deleting it.
Step 2: Out with the Old. As you file new documents - particularly periodic statements - be sure to destroy old documents, as needed. In doing so, you'll keep your file cabinet from bloating with unnecessary information.
Notice that incoming documents are handled once. The principle of single handling forces you to make an immediate decision to keep or destroy any new documents you receive. By practicing this, you will eliminate the all too common clutter of unopened, unfiled documents.
In the second step, you're forming the habit of minimalism by consistently destroying old, unnecessary documents. Whenever we work with clients to organize their financial documents, nearly everyone has several hundred pages of documents that are completely unneeded.
The Quick List
Your file cabinet should have the following file folders and content, as applicable:
- Auto Insurance | policies, insurance cards, most recent statements
- Automobiles | title, copy of most recent registration
- Bank Accounts | up to one year of statements
- Brokerage Accounts (non-retirement) | up to one year of statements
- College | scholarships, up to one year of savings/investment/loan statements, FAFSA forms, tuition and fee statements
- Credentials | diplomas, certifications, awards
- Credit Cards | up to one year of statements
- Credit Reports | most recent credit report from each bureau
- Dental | insurance policies and cards, up to one year of statements
- Disability Insurance | policies, most recent statements
- Employee Benefits | most recent benefits enrollment confirmation
- Health Insurance | policies, insurance cards, up to one year of statements
- Homeowners Insurance | policies, most recent statements, annual inventory video
- Identification | birth certificates, Social Security cards, passports, copy of driver's license
- Legal Documents | wills, trusts, living wills, powers of attorney, final directives
- Life Insurance | policies, most recent statements
- Loans | loan contracts, up to one year of statements
- Medical | vaccination records, up to one year of invoices and explanations of benefits
- Net Worth Statements | at least one statement per year
- Pets | ownership documents, vaccinations, insurance records, all medical history
- Real Estate | all deeds, liens, appraisals, most recent property tax bills
- Renters Insurance | policies, most recent statements, annual inventory video
- Retirement | Social Security statements, pension plan documents, up to one year of account statements
- Taxes | current year tax-related documents including income and deductions
- Vision | insurance policies and cards, prescriptions
- Warranties | all unexpired warranty documents
Questions, Comments, Suggestions
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