Probably one of the biggest tasks for anyone managing their personal finances is how to manage all of the paperwork associated with the accounts. It seems that each account generates about 15-20 statements or mailings a year. If you have several accounts, by the end of the year you could have a pile of papers stacked up waiting for you to deal with them.
How do you know which pieces of paper to keep and which to discard? How long do you need to keep the paperwork for? Where should you store everything? Hopefully, this post will be you begin to organize you financial paperwork.
First Contact
When you get the mail this is your first chance to help organize you financial paper work. Take a few minutes to review the mail and discard any random catalogues or mailings that are not addressed to you. These mailings typical are addressed to 'Our Neighbor", 'Resident' or some other pleasant nondescript word. Next pass is to separate the personal letters, bills and account statements from other pieces of mail actually addressed to you. Open the bills and account statements and get rid of any extra paperwork (advertisements, the used envelops) included in the envelop. I can't tell you how many advertisements I have thrown out after opening a credit card bill. Once you go through this step put the actual bills and account statements in an In Box so you can deal with them later.
On the final pass through the mail, go through and discard any other random mailing you are not interested in reviewing further. It is best to review anything I have pulled out soon after doing this. If not I will usually let it sit around until I throw it away. A good thing to do is to shred any credit card applications or other things that have personal information. Can't be to careful about identity theft, read my post on identify theft.
In Box
The In Box can be anything you want; a box, a bin, a file folder, an envelop, etc. just as long as it's only use is for mail you need to deal with. Depending on the type of person you are, you may empty out the In Box everyday or twice a month. Some people may want to deal with everything in one sitting, while others may stretch it out over a couple of days. Whatever works for you is what you should do, as long as it is consistent. As you go through and resolve the items in your In Box, send them to the Out Box.
Out Box
Just like the In Box, the Out Box can be anything you want, just as long as it's only use is for the mail you need to file. Again, you can determine when to empty your Out Box on a schedule that works best for you. I usually skip this step and after dealing with the In Box and go directly to file.
File
At this point, you can separate bills from account statements. Bills get put into a folder and kept until the next monthly bill. You should verify that the previous months payment was credited correctly and then shred the old bill. Quite a few people may want to keep their monthly bills, I am just not one of them. If you want to keep you monthly bills, it would be best to keep an expanding file with a minimum of 12 sections, with each section representing a month. Some bills you may need to keep to help determine the cost basis when you sell the item, or if you need to prove the value of an item for insurance purposes.
Account statements get filed in a three-ring binder with tabbed sections, each tab representing a individual account. Some accounts (bank accounts/trading accounts) produce just monthly statements, so you should keep each of those. Other accounts (401k accounts/mutual fund accounts) produce monthly, quarterly and/or yearly statements. In terms of keeping the amount of paperwork to a minimum you should just keep the statement with the longest time period. For example if your mutual fund company issues all three types of statements, just keep the yearly statements.
Sometimes you may need to keep some random or loose items that are shaped a little strangely. You can always add zipper binder pocket to store those items.
Archive
Three ring binders can be expensive and sometimes take up a lot of shelf space, so after a year you can transfer the statements into a pressboard binder. You can transfer all the statements along with the divider tabs into these binders and store them somewhere. It would be good to write the year on the front cover of the binder.
You can also store your binders in boxes to free up space in the bookshelf.
Last Contact
How long do you need to keep your financial records? Check out this post which covers which financial paperwork to keep and for how long. Once you have determined that the documents are no longer required, you should destroy them by shredding. Most of these statements have sensitive information that you may not want others to be able to see.
Electronic Storage
A lot of financial companies offer the opportunity to receive your statements electronically or the ability to download them in PDF. Some companies even charge you for a paper statement. The question is, should you keep hard copies of your financial records if you receive electronic copies?
One huge benefit to electronic statements is that your paperwork is greatly reduced. You would still need to be organized, but it can be easier to 'file' electronic statements then it is to file paper statements. One huge problem with only electronic statements is what happens to all of your information if your computer crashes? I think that it is best to either have a paper copy or back up the disk drive often.
I think that for most types of accounts, paper statements will eventually go the way of the checks bank use to return to you. Most companies would prefer to do this. Just think of the money they could save by not having to print and mail documents to account holders. I still like to have a paper copy of account statements. Mainly because I will spend more time reading them then if I have to review them on the computer.
Reduce
One way to help reduce the amount of paperwork you have to deal with is to remove you name from mass mailers and pre-approved credit card offers. Not only will this reduce your hassle factor you will do something good for the planet. Here are a couple of facts about junk mail from The Center for a New American Dream.
- More than 100 million trees’ worth of bulk mail arrive in American mail boxes each year – that’s the equivalent of deforesting the entire Rocky Mountain National Park every four months. (New American Dream calculation from Conservatree and U.S. Forest Service statistics).
- In 2005, 5.8 million tons of catalogs and other direct mailings ended up in the U.S. municipal solid waste stream – enough to fill over 450,000 garbage trucks. Parked bumper to bumper these garbage trucks would extend from Atlanta to Albuquerque. Less than 36% of this ad mail was recycled. (U.S. Environmental Protection Agency)
- The production and disposal of direct mail consumes more energy than 3 million cars. (New American Dream calculation from U.S. Department of Energy and the Paper Task Force statistics)
- One study says Americans throw away 44% of bulk mail unopened, yet still spend 8 months per lifetime opening bulk mail. (Consumer Research Institute)
Below are some links to use to reduce your junk mail.
- Credit Card Offers > https://www.optoutprescreen.com/?rf=t
- Larger List > http://www.privacyrights.org/fs/fs4-junk.htm
Source:
'Just the Facts: Junk Mail Facts and Figures', New American Dream
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