David Bach’s latest column on Yahoo Finance serves as a checklist for getting your personal finances in order. I went through this process several years ago but it would have been nice to have some guidance. Simply getting your information together in one location is the essential first step in organizing your financial life. Here’s how Bach suggests you categorize:
* Tax Returns. I file away my tax returns and supporting documentation. For the last several years, I also keep electronic versions (PDFs) of my returns. They get backed up on DVD-ROM with all of my other files every so often, as my computers have a tendency to crash. (DVD-ROM isn’t the best solution for backing up important files from a hard drive, but it’s the most affordable.) Bach says to keep tax returns for longer than seven years.
* Retirement Accounts. I have a 401(k), a Roth IRA, and I’ll be adding a SEP IRA shortly. I keep my retirement account records close to each other, but organized by account. I keep the statements but throw away all the extra junk they send each quarter (after reading).
* Social Security. I get my benefits statement every year and file it away, not far from my retirement accounts folder.
* Investment Accounts. Like the retirement accounts, I keep the quarterly statements, read the junk to ensure there are no changes to the account (like added fees) that will affect me, and if there’s nothing worth saving, I don’t.
* Savings and Checking Accounts. Generally I save confirmations of account openings which will include my account numbers and company contact information. I save my monthly statements but every so often I discard older papers.
* Household Accounts. I don’t own a house, but I have a folder for all of the relevant rental information including my lease. I also keep folders for utility bills, which help me see that I’m expending less electricity this year but paying more.
* Credit Card Debt. I save my monthy statements and discard them occasionally. I track all expenses in Quicken and access my accounts online so keeping these records isn’t necessary. I pay off my card every month and I’ve never run into any problems.
* Other Liabilities. Student loan records are filed away. The loan companies get tricky when it comes to origination and consolidation, so I like to make sure I have complete records.
* Insurance and Medical Records. I keep an eye on my insurance company as well. I had a check-up at the dentist recently, and insurance is covering less of my expense this year. (Meanwhile, I’m paying more for the “same” coverage.)
* Family Will or Trust. I don’t have this yet. My family is me.
* Children’s Accounts. I have no children.
Bach did a good job outlining the major categories of files you should start with to organize your personal finances. The only thing I think is missing would be a file for personal documents such as birth certificate and passport.
Published or updated March 28, 2006.