Here’s how to get a jump-start on creating a system to organize your bills, statements, policies, and other financial paperwork.
Financial organization is a cornerstone of a healthy financial life. At the most basic level, financial organization saves time and money because it aids in paying bills on time, finding needed documents during tax season, providing proof of payment, disputing credit cards or billing errors, and avoiding the stress of dealing with piles of unorganized bills and paperwork.
It also sets the stage for better decisions on investments, budgeting, debt, and investment planning. Financial organization helps your working relationship with your financial professional because there will be less time spent looking for paperwork and more clarity around the overall financial situation, leading to more informed decisions about your investments and financial plans.
While having a system to organize financial paperwork is important, it is not so important which system is followed but that a system exists. In most cases, a combination of electronic and paper filing systems will do the trick.
Bills, statements, policies, and other documents that are delivered online can be stored and backed up on a computer hard drive or through online banking websites, third party bill pay, and website document storage platforms. Some websites offer budgeting and spending information and advice.
For couples, clearly establishing responsibilities for financial matters is an important priority. If one spouse manages the finances, the other spouse should be informed about what is going on financially, where important documents are stored, and the passwords for all online accounts.
What documents to keep and what to toss is another important part of becoming better organized. The IRS recommends retaining tax returns and any documents that support tax returns for seven years. Other documents such as paper bank statements, investment account statements, and credit card statements can be shredded after a year, especially if they can be accessed online in the future if necessary.
Financial paperwork generally falls into the following categories: investments, taxes, credit cards and loans, college savings, retirement savings, insurance, and estate planning. Let’s take a look at what documents you need to keep on hand in these areas.
Tax planning is a forward-looking process that identifies strategies designed to reduce future income taxes. Note that income tax planning is not the same as income tax preparation, which focuses on documents required by the IRS. For income tax preparation, consult with your tax advisor.
A variety of documents are required to prepare taxes and assess your tax situation. Keeping proper tax records is extremely important for IRS, accounting, and investment purposes. Tax documents that should be safely stored and easily accessed include:
Tax returns for the last 3 years
Retirement plan information showing the amount you are eligible to contribute
Paycheck stubs or statements showing regular income and unusual taxable distributions that may change your tax picture this year
Statements showing major deductions, such as mortgage interest and property taxes
Statements or other documentation showing the cost basis and current value of assets owned outside retirement accounts
Information on charitable contributions
These are common investor accounts which you may or may not have. Keep policies, statements, and other important paperwork for these accounts accessible to help you and your professional develop an investment strategy.
Checking accounts
Savings accounts
Money market accounts
Certificates of deposit
Brokerage accounts
Mutual funds
Annuities
Life insurance cash value
IRAs
Retirement plans
Employee stock purchase plans
Stock options
Stocks
Bonds
Real estate
Precious metals, other collectibles
Business interests & other investments
Debt is often a significant part of an overall financial picture. Statements for loans will help get a handle on your level of debt, interest rate of that debt, and loan terms on these kinds of revolving and installment credit debt.
Credit cards
Mortgages
Auto loans
Student loans
Business Loans
Personal loans
College planning is vital for parents. There are many types of college savings vehicles, so be sure to keep track of all accounts with funds saved by parents, grandparents, aunts, uncles, and other relatives. To stay on top of balances and track savings, these statements are useful:
Statements of accounts earmarked for college (529 plans, Coverdell accounts, UGMA/UTMA accounts, accounts in parents’ names earmarked for college)
Completed FAFSA (Free Application for Federal Student Aid) for students already enrolled or preparing to enroll in college
Other documentation relating to student loans
Retirement is the largest financial goal for most investors. As such, it’s very important to keep track of all retirement accounts, including 401(k)s from current and previous jobs, traditional and Roth IRAs, and other accounts such as 457 plans.
Account statements and summary plan descriptions for all employer-sponsored retirement plans
IRA account statements
Social Security Personal Earnings and Benefits Estimate Statement
Account statements for all assets. (See Investment Planning)
A budget showing expected living expenses in retirement
Employee benefits information on health and retirement benefits
Veteran’s administration record
Risk management includes life, auto, disability, health, and other coverage you may need as well as current or future Social Security benefits. To manage and periodically re-evaluate coverage levels, deductibles, and premiums, retain these documents, including employer-sponsored insurance.
Life insurance
Disability insurance
Health insurance
Homeowner’s or renter’s insurance
Automobile insurance
General liability (umbrella policy)
Professional liability
Long-term care
Social Security Personal Earnings and Benefits Estimate Statement (PEBES) showing survivor and disability benefits
There are two key aspects to estate planning: wealth transfer (ensuring that assets are transferred to the right people) and estate tax savings. Planning for and monitoring your estate requires maintaining these records, including:
A copy of your latest will and letter of instructions
Index of all assets (see list under Investment Planning. Also includes real estate, business interests, etc.)
Trust documents
Advance directives
Power of attorney for healthcare
Power of attorney for financial matters
Prenuptial agreements
Beneficiary designations for IRAs, life insurance, annuities, employer-sponsored retirement plans
Statements or deeds of trust showing how assets are titled
Pet care
There are also many other important documents that fall into a catch-all miscellaneous documents category. These include everything from a Social Security card to military service records to adoption and divorce paperwork. Keep the list current by adding new documents as appropriate.
Birth, death, and marriage certificates
Social Security card
Passport
Vaccination records
Military service records
Deeds and titles to all real estate, autos, and other hard assets
Adoption papers
Divorce papers
Prenuptial agreement
Religious ceremonies such as baptism, confirmation, ordination, marriage, annulment paperwork
Jewelry appraisal list for all items valued at more than $500
From employers to bankers to insurance agents, most of us have a large and constantly changing list of trusted professionals. It’s important to update this at least once a year as this information usually changes often. In an emergency, family members need to know who to contact for important information about insurance policies, account balances, etc.
Make a list of all the password and personal identification numbers (PINs) that are important to your financial affairs. Keep it with your important financial documents and update it once a year.
Household Employers (including immediate supervisor, HR manager, etc.…):
Contact Name & Contact Info:
Banks, bankers & account numbers (includes primary accounts, money market accounts and safety deposit boxes):
Banker’s Name and Account #:
Investment professionals (include all investment professionals, trustees, etc.):
Advisor’s Name and Account #:
Accounting professionals (includes CPAs, accountants, bookkeepers, enrolled agents, bill pay, and other accounting services):
Accountant/CPAs Name and Account #:
Credit professionals (includes mortgage brokers, credit counselors, bank loan officers and others):
Broker/Counselor Name and Account #:
Insurance professional (includes life, car, home, disability and other insurance agents and advisors…):
Professional/Agent Name and Account #:
Estate Planning (include estate planner, trust services, and executor):
Estate Planning Professional and Account #:
Attorneys (including estate planning, divorce & prenuptial, business, rental, commercial & intellectual property, & taxes)
Attorney/Other Name and Account #:
Other family service providers (including financial aid counselor, retirement coach, and life or career coach)
Counselor Name and Account #:
Health care providers (including primary care doctors, specialists such as cardiologists, gynecologists, oncologists, etc.)
Provider Name and Account #:
Office: 512.381.4500
Toll-Free: 1.800.796.5690
Email: info@echelonfinancial.com
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Office: 512.381.4500
Toll-Free: 1.800.796.5690
Email: info@echelonfinancial.com
ces
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