Connie J. Schlosberg

Organizing your finances is a hassle. Each month you get sent dozens of bills, statements, and other financial documents via email and mail. It’s daunting. And if you’re a disciple of the Marie Kondo method of organization, you know you shouldn’t keep anything if it doesn’t “spark joy.” You can avoid this by creating a digital file system. Learn how to get organized by following this guide. 

Create a financial file system

Digital Financial File Folder System

Checking and Savings Accounts

Keep your monthly bank statements here, with a separate folder for each bank account. You only need to keep statements for a few months, no more than a year.

Credit Cards

Create folders for each credit card you have. Keep the monthly statements and any correspondence on interest and fees. For more information on managing credit card debt, read these articles.

Student Loans

Keep your loan agreement and payment records for each student loan you have. Also, retain any important messages such as interest rate notifications and requests for deferrals and IBRs.

Medical Bills

File your statements, payment receipts, and payment plan agreements for any medical debt that you are paying back on time.

Car Loans

Keep your loan agreement, payment receipts, and any important documentation on your car such as warranties for each auto loan you have.

Retirement Accounts

You should create a folder for each retirement account you have. Keep your quarterly statements. If you have an employer retirement account, you should keep your sign-up package, because it contains the investment options you have. 

Social Security

Keep your most recent social security benefits statement in this folder. If you haven’t signed up for online statements from the Social Security Administration, request it by going to www.ssa.gov.

Investment Accounts

This folder is for every statement you received that is related to any investments you may have. These investments include stocks, bonds, and mutual funds that are not retirement accounts. Create a separate folder for every brokerage account you have.

Tax Returns

According to the IRS, you should keep your tax records for three years. So create four folders within the Tax Returns folder. Three folders will include tax filings for the last three years, and one folder will be for the current tax year. In each tax year folder, include all that year’s tax documents such as W-2s, 1099s, receipts to support deductions, and a copy of all tax returns filed for that year. 

Keep records for more than three years for these transactions: home sale/purchase, stocks, bonds, IRAs, 401Ks, rental property, and any businesses that you own. 

House Accounts

If you own your own home, create a folder for your sales agreement, title, title insurance, and houseowner insurance policies. Also, create a folder for home improvements. Keep all your receipts for home improvement for as long as you own the house. You will need these receipts for tax purposes when you sell your home. Create another folder for your home mortgage and line of credit so you can save your loan information and mortgage statements. If you rent, create a folder for your lease agreement, security deposit receipt, and payment receipts.

Insurance

Create a separate folder for each of your insurance policies: health, disability, life, auto, and homeowners or renters’ insurance. Each folder should contain the appropriate policy and payment records.

Will and Trust

This folder should hold a copy of your most recent will, along with the name and contact information of the attorney who drafted it.

Credit Reports

This folder is for your most recent credit report and score. You can check your credit score for free at Credit Karma.

Which records should you keep, and which can you delete?

Being a packrat digitally is even easier than being a packrat physically. We keep too much info for way too long. Mea culpa!

As I mentioned above, you only need to keep tax records for three years. You should keep records that pertain to your home and investments for as long as you own them. This includes your retirement accounts, insurance policies, mortgages, and loans.

Here’s a list of documents you should delete.

  • Canceled checks for closed tax years
  • Credit card statements for closed tax years
  • Canceled insurance policies
  • Old financial securities statements (e.g., stocks) for closed tax years (unless they have cost-basis information)
  • Annual reports from stocks and mutual funds
  • Outdated documents (essentially any document that either expired or is replaced with a new document)

 

Now you should be financially organized. Do you feel empowered? Hopefully, you feel more in control of your finances. This is the first step to taking your financial life back. The next one is figuring out where you stand financially. DebtMD has a free tool to help you analyze your debt. Check it out here.

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