With credit card statements and health insurance records pouring through the mailbox each month, keeping all that paperwork in order can feel like a full-time job. And it’s an important one. Keeping the bills paid, insurance updated, and investments on track all depend on staying organized. We spoke with Brooke West, a private financial advisor and first vice president at SunTrust, about some of the best ways to do that. Not only does West keep her own family finances in order, but she helps her clients do so as well.
West’s secret weapon? A three-ring binder. “I call it my financial bible,” West says. She uses a new one every year to hold all her paperwork. She has tabs for bank statements, Social Security benefits, estate planning, pension and retirement benefits, investments, and credit reports. For a few paper-heavy categories, such as flex-spending receipts, she has separate files. When possible, she stores documents online (such as with paystubs and credit card statements) and shreds the ones she no longer needs.
For anyone looking to master the art of organizing household financial documents themselves, West shared her top ten tips:
1. Download information online and then toss it. When it comes to pay stubs and monthly credit card statements, West doesn’t bother keeping stacks of paperwork. Instead, she scans the information if it’s not already online, and then gets rid of the rest. Similarly, she keeps annual investment statements and tosses the quarterly ones when she no longer needs them.
2. Invest in a shredder. If the fear of identity theft is keeping you from getting rid of paperwork you no longer need, then go ahead and get one. Simple ones retail for less than $50. “Everybody should have a shredder and anything personal should be shredded,” says West, adding that the upcoming back-to-school season offers plenty of deals on the devices.
3. Sign up for electronic statements. Many banks and investment companies offer customers the option of receiving emailed statements instead of paper ones, which cuts down on the paperwork. West cautions that anyone going online only has to make sure their bills and statements don’t get buried in their inbox.
4. Learn to let go. Unless you’re over-charged or having an insurance problem, then West says you probably don’t need to keep years of insurance receipts. West recommends reviewing the paperwork you still have at the end of the year and deciding what you can do away with. (Again, the shredder comes in handy here.)
5. Keep a tax file. Tax receipts can also add up to a lot of paperwork, so West recommends keeping a separate file full of charitable donations, business expenses, and anything else you might need at tax time.
6. Back up online records. If you’re storing information on your hard drive, then be sure to use a back-up system (such as a flash drive or other device) to guard against computer failure.
7. Keep old, pared-down binders for several years. “I haven’t discarded one yet,” says West, which means her oldest binder dates back about ten years. She says she’s keeping them around just in case of an audit. Of course, those old binders contain only year-end statements and not the monthly ones to limit the amount of old paperwork.
8. Make it pretty, but only if you want to. West prefers the sleek and simple look, but other people might find organization more enjoyable if it also looks pretty. The Container Store, Staples and even Etsy.com offer a range of colorful planning products. If the binder is going to sit on your desk or another visible spot, then you might want it to be visually-appealing.
9. Keep your partner in the loop. If you’re the household organizer and suddenly become incapacitated (or the cable goes out while you’re on a business trip), your partner will need to step in. That means he’ll need to know passwords, account information, and any other relevant information. Keeping the binder up to date will make it easier for him to keep the household running in your absence.
10. Get help. If you work with a financial advisor or estate planning attorney, West says they can help, by sending you reminders about certain things at different times of the year. For example, you might want an reminder to update your insurance information in March, or to organize tax receipts in February.