Organized financial life not easy. When it comes to any self-improvement project, it is hard but we need to do.
Learn this five steps to an organized financial life :-
1) Learn What to Stash and What to Trash
– There’s a reason many of us put off organizing our financial paperwork and tend to hang on to too many documents. Throwing out a financial statement that we might need for insurance or tax purposes has more serous repercussions than pitching a sweater that just might come back into style. Important part is discipline.
2)Know Where to Put What You Keep
– Once you’ve determined which financial documents you can stash in your circular file and which you should be retaining, you’ll have to develop a system for storing the items you’re keeping.
If you have a filing system that works for you, create a master directory. If you don’t, make a three-tier scheme : one for documents that relate to the current year, one for papers that you need to hang on to but have no immediate need for; and a safety deposit box for irreplaceable documents.
Reserve the current year tier for any items that you might need to put your hands on in the near future including banking and investment statements, documents relating to the current tax year and utility and credit-card bills for the current year.
After tax time, weed your current-year records, moving the previous years banking and investment statements, copies of your completed tax returns, insurance related documents and any other financial records you can anticipate needing down the road.
Reserve your safety deposit box for those few documents that would be particularly tough to replae if they were destroyed.
3)Create a Master Directory
– It is important to make master directory. You should list all of your financial accounts, from banking to insurance policies to investment accounts, along with your passwords and the names and phone numbers of any advisors that you use. Give this document to a close relative or trusted friend or create an electronic document in a very secure location.
4) Stay on Top of Incoming Mail
– It’s important to have a strategy for tackling mail into category and integrate these strategies into your daily routine.
Credit card solicitations and other printed statements often include your identification, don’t discard them without shredding first.
5)Take Advantage of Technology
Use the technology. Electronic bill-paying systems and automatic debit programs can also help simplify your financial life. Not only can they greatly reduce the time you spend on financial paperwork but also ensure that your bills get paid on time.
Reference : Investing for the Long Run – MorningStar Investment Centre