If your financial files have taken on the look of a “paperstorm,” the thought of organizing yourself can feel overwhelming. But tax documents, estate plans and financial statements are simply tools. Keeping them sharp and in one place gives you (or a trusted someone) a way to apply them when needed. Here are three simple steps: First, determine what you need to keep; second, understand how long you need to hold onto your paperwork; and, three, decide where you’ll file your important “papers.”
What should you keep track of?
Any file is a snapshot in time. Its value hinges on you keeping the information up to date. Here’s a partial list of the essential items your file should contain: will, health care proxy, power of attorney; financial statements (e.g., investment accounts and bank statements); life, disability and long-term-care insurance; credit card statements, real estate deeds, and loan documents.
How long should you keep a copy of your financial documents?
In general, keep the first statement you receive on a new account, then keep each year-end statement plus the most current quarterly statement. Most financial institutions will send older statements upon request. A good guide for gauging how long to keep your documents is at USA.gov, where the U.S. government provides a tablefor managing this kind of thing. If you keep your financial statements on a computer, then make sure someone you trust has your password(s).
Are there secure software packages for tracking the performance of financial holdings?
We give our clients access to software (including an online vault) that aggregates their accounts and financial data. This creates a more dynamic, secure tracking system than what you’d get from a paper or manual system, although some people still want an old-fashioned accordion file. There are also web-based tools, both paid and free, that a person can use to organize bills and online statements. For example, TIME.com recently named FileThisamong its 50 Best Websites of 2014, and U.S. News & World Report suggested MoneyStream.comas a free service for organizing bills online.
The key to being organized financially isn’t neatly filing every piece of correspondence that crosses your door or inbox. Organization is about having access to relevant, current information when you or a confidant need to make a decision. If you’d like help getting organized or simply don’t have the time to do it yourself, contact us.
Most clients say the best way to stay financially organized is meeting annually, semi-annually, or quarterly with an advisor. There’s nothing like a pending meeting to focus your mind on preparation.
If you have a suggestion or question, email me at [email protected].