Smart Consumer Series: Maintaining Your Personal Financial File

Use this brief guide to organize your personal paperwork

Everyone needs to keep certain personal financial files more or less permanently. But which files should you keep, and why do you need to keep them? How long should you keep them and in what format? Lets start with the most obvious question.

Why Keep All Those Papers?

  • Tax calculations  -Your tax return might be audited. Tax authorities at both the federal and state levels have the right to reopen your tax return at any time if there is a suspicion of fraud.
  • Sales Disputes  – In a sales dispute you are best prepared if you have some kind of proof of your part in the transaction.
  • A Natural Disaster or Terrorist Act– As victims of Hurricane Katrina and other natural disasters experienced firsthand, it is possible that you could need to leave your home on short notice, leaving personal possessions and records behind.
  • A Personal Medical Event – In the event of  your sudden death or incapacity, it’s highly protective for you to have your named agents for medical and financial affairs fully informed of the details of your personal data, so they will be ready to act on your behalf.
  • Transmission of Family History – Each of us at some point becomes how information about the family gets passed down to the next generation.

A Sample Filing Structure

If you keep paper files, set up your filing cabinet with the major sections outlined below. If you prefer computer files, set up folders, and then add scanned documents.

  • Income Taxes – Keep a copy of each federal and state income tax return filed in the last seven years, along with supporting documentation.
  • Estate Planning – Keep documents prepared by your attorney.
  • Insurance -Have a separate file for each kind of insurance.
  • Employee Benefits -For each family member, have a file for the current and prior curriculum vitae and a file for each employer, past, and present.
  • Personal Roadmap -In the event of a community emergency or of your personal incapacity, you or your heirs need a detailed roadmap of your financial life.
  • Home Inventory -Create a home inventory to use in the event of a major loss. Photographic documentation helps your memory and can be used to prove ownership.
  • Warranties and Owners Manuals -This file holds warranties and owner’s manuals for your everyday possessions that are not specifically insured—e.g., the lawn mower and the air humidifiers.
  • Proof of Transactions -At the beginning of each calendar year, establish an accordion file (or, for your computer, its equivalent for scanned files). Label each divider with a certain kind of transaction. As you take care of daily finances throughout the year, drop papers into the appropriate section of the accordion file. At year-end, use this file to help prepare taxes. Then, relegate the file to an archive storage location and begin anew.
  • Investments -Set up one file for each investment account.
  • Vehicles -For each vehicle you own, keep titles (and, if you are meticulous, maintenance records).
  • Property -For each property you own, include the lease, or deed with the closing statement, documentation of permanent improvements with receipts, appraisals, records of open mortgages and proof of former mortgages being paid in full.
  • Personal Papers – Have a distinct file for each family member. Keep birth and baptismal certificates, confirmation records, Social Security cards, diplomas and professional licenses, wedding licenses, military discharge papers, proofs of citizenship, divorce agreements etc.
  • Family Passports -Keep passports in a distinct file (or fireproof safe) so that preparation for travel abroad is easy.
  • Family History -For each person in the family, have a distinct file to store individual medical information, such as immunization records, lab, and X-ray results and operative reports.

For more details on organizing and maintaining  your personal files click here!



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