I recently had the great joy of moving to a new home. The systematic packing and organizing of 10 years of our lives seemed insurmountable at first. My wife, my three girls, and I have accumulated a great deal of stuff that needed to be organized and moved in 30 days. Where, how, and when to start are all questions that were easily avoidable with the slightest of distractions.
At one point, while purchasing boxes and packing tape, in addition to other assorted necessary moving supplies, I blurted out to my wife, “Some people are simply not wired to be organized!” And although recent studies show that a disorganized brain could be a sign of intelligence — a fact that I have been telling my wife for years — often we get so caught up in our daily activities that we neglect finding ways to stay organized. That’s fine if we’re talking about your antique Hummel collection, but not exactly helpful as it relates to maintaining vital records.
Whether it’s your finances, medical records, college transcripts, or a spreadsheet of volunteer mileage and hours, maintaining good records, particularly when it comes to your financial activities, is the foundation of a sound financial plan. Plus, it can pay big dividends at tax time. For example, if you’re unorganized now, you may not be claiming all your allowable income tax deductions and credits.
Step 1: Start now
The most immediate action we can take toward good record keeping is to adopt a going-forward attitude. Creating a new healthier habit means less procrastinating. Even if you do nothing with the backlog, going forward, every new document or piece of information should be appropriately recorded or filed. Then, at the very least, you stop the problem from getting worse. Whether the information is digital or print, file it, throw it away, or shred it. Done. Avoid shuffling paperwork from one corner of your desk or computer to another. The sooner you take action, the sooner it will become a good habit.
Step 2: Use the ten minute rule
You’ve started improving your process, now it’s time to tackle the backlog of documents. If it’s overwhelming, employ a ten minute rule. Block out ten minutes to review what you can with the goal being to delete or dispose of everything that clearly is not worthy of your new record keeping process. At this point we are only talking about junk mail, magazines, or anything else that has nothing to do with maintaining vital records, so there are only two categories: save or trash. The 48 back issues of National Geographic stuffed in a box in your garage may come in handy for your kid’s book report, but they will not improve your financial well-being.
Step 3: Get serious
Once you’ve weeded out junk mail and other unnecessary items, carefully go through what’s left and determine if it is something you really need to keep. If you aren’t sure, then you should immediately research it. IRS.gov has great information about document retention and there are other financial experts who have weighed in on record keeping.
Ultimately, it’s up to you to determine your filing system. Do what makes the most sense and what you’re likely to remember. The last thing you want to do is start this process only to spend hours hunting down a document because you forgot where you filed it. Also, if there are two of you in the picture, make sure you and your partner are working toward the same goal. This will help provide support, ensure consistency in your record keeping, and reduce stress (and the possibility that one of you will end up sleeping on the couch).
Step 4: Take advantage of technology
Given the breadth of new technology to help you get organized, maintaining digital records is easier than ever. Your financial institution offers online banking services that make the transition from paper to digital financial records a breeze. Services such as online bill-pay allow you to safely track and pay bills; and mobile banking gives you the ability to transfer funds, view transaction history, and obtain account summaries on-the-go.
Software such as Quicken and our own FinanceWorks can also help you get a better handle on your financial records and spending. Don’t have a scanner? Use your phone to take a photo of a receipt or other paper document, email it to yourself, and then save it to a digital folder. Technology can be your friend when it comes to getting organized. Research what’s available and pick something that works for you.
Practice makes perfect
As I weave through the maze of boxes in the garage of my new home, I still believe that my natural organizational tendencies put me in the company of geniuses. However, regardless of whether your genetic makeup gives you some killer organizational skills or you just want to improve your abilities, there are processes and tools to ease the burden. Whether you choose a system that is digital, paper, or a combination of both, SAFE is here to help you resolve to make financial organization a good habit. Set up a system now and in six months you’ll be grateful you did.
