Get your financial documents organized [Financial Perspectives]

Is your house like mine in that you feel like you have paperwork everywhere?

The end of tax season is a good time to get your financial house in order. Reducing your paperwork clutter can give you a feeling of organization and control and can help you get you pointed in the right direction to do some real financial planning. There are several things you can do that can have immediate impact in helping you de-clutter

First, you need to sort your paperwork. Put all your tax information together in an envelope or file folder marked by year. I encourage my clients to keep their tax information for years. This is especially important if you are an investor, as you need to keep track of your cost basis in case you sell any of your investments. All of your credit card, utility and cell phone/telephone/cable bills should be organized by month. In most cases, it is not necessary to keep more than a year’s worth of statements (unless you claim these for business expenses or unreimbursed employee expenses).

Second, organize your investment statements, insurance policies/bills, bank account information, etc.  In many cases, your investment and bank statements can be shredded (except for the last statement of each year, which should also include the annual tax statement you are sent). Most financial firms provide online access to your accounts. For clients concerned about clutter, I encourage them to sign up for online access. Some financial institutions even reduce their fees/charges for those that sign up for this option.  If you receive forms titled 5498 for your retirement accounts, it is important to keep them with your tax information.

Third, consider creating a digital library of all your important financial information. This can be done by purchasing one of the filing systems you may see advertised on TV or at one of the local office supply stores. These systems allow you to scan your information and sort the data into easily retrievable files. If you like the idea of this type of system, it would make a lot of sense to use it for all your important documents.  If you choose to save the files on your computer’s hard drive, it is important that you have your computer backed up. There are a number of different ways to do this, but some of the popular ways include Carbonite and Dropbox.  Carbonite actually backs up your files every time you are online. If ever you have a problem with your computer, you simply go to Carbonite’s website and access your files. It is a secure website.

Hopefully these steps will help you get organized. Good luck with your planning!

The views expressed are not necessarily those of Cambridge and should not be construed as an offer to buy or sell any security.

Jim Heisler, CFP®, CDFA™, CASL™ Family Wealth Services, LLC 8725 Frankford Avenue Philadelphia, PA 19136 jim@familywealthservices.net 215-332-4968

Jim Heisler is a Certified Financial Planner with Family Wealth Services in Holmesburg. You can read all his Financial Perspective columns here.