Thursday, February 17, 2011

Organizing Finances & Files - What to keep, what to shred

Kelley Long, Financial Coach
I'm in charge of most of the day-to-day finances in our household and I'm ashamed to say I kind of suck at it. Staying on top of the influx of statements and receipts and bills and filing is a tedious chore that I dread. 

I've already learned from organizer Colleen Collins Josellis that I need to allocate more time to paperwork, which is certainly helping. But I've turned to Kelley Long, a Financial Coach and CPA,  for expert advice on what to do with all of those financial documents once they hit my desk. 

When it comes to getting organized, no area can be more intimidating and nerve-wracking than your finances. Kelley, who works primarily with women, says "It can be very emotional; clients are often fearful and embarrassed about what they don't know."

Unfortunately, staying in the dark doesn't make the issues go away. "They'll only stress you out more later," says Kelley, "so it's better to face the initial pain and take control." Kelly helps her clients get a grip on their finances so they can assess their situation and begin taking steps toward where they want to be.

Here are her answers to some of my most pressing questions.

What documents do I need to keep and for how long?
Kelley offers these guidelines:

  • Receipts - at least until they've cleared your credit card or bank statement; longer for return or warranty purposes. 
  • Monthly Bills - at least until they show as paid the next month. If you want to compare, keep up to a year on file. Longer if you use a home office deduction.
  • Pay stubs - until receive W-2.
  • Bank & Credit Card Statements - 2 years
  • Investments & Life Insurance - Keep monthly statement until you receive quarterly, quarterly until you receive annual. Keep annual statements for the life of account.
  • Tax Returns & Supporting Documents - 7 years
  • Home or condo paperwork & documentation of improvements/repairs - as long as you own home.

I don't have room in my desk for all those files!
Only keep your current files in your workspace (last 12 months.) The older files should be boxed, labeled and put in the basement or accessible storage area.

Do I need to rent a safety deposit box? And what documents should go in it?
"Forever" documents like birth certificates, passports, Social Security card, Marriage license, Divorce decree, Will, Trust, Power of Attorney, transcripts and diplomas should be kept either in a safety deposit box or a fireproof safe in your home.

Can I just recycle my old statements and bills?
No! I've seen very well-dressed people digging through my dumpster on trash day. To protect against identity theft, it's important to shred any account information that has your identifying information on it (name and address.) You can recycle the shreds.

Are there some things I don't need to hang onto?
There's no reason to keep user manuals or stock and mutual fund prospectuses because they're all available online now. As for warrantees, it depends on the item and if it's worth the hassle to get it fixed.

After talking with Kelley I have a much better understanding of how to organize my files. Now armed with my labeler, my three inboxes, my shredder and fireproof safe (from Target, where else?) I am ready to assume control of my household finances!

But Kelley had one last piece of advice, the same she gives to all her clients.

"I tell everyone who is beginning a new organizing system to take it easy on themselves. It's a big change, like going on a diet. Don't feel bad the first time you slip up, just get back on track."

Note: Kelley works with her clients on a session basis; she doesn't sell products or collect commissions. She lives in Chicago can be reached at her website:

Other related posts:


Killeen Mini Storage said...

Thank you for this list. So many are disorganized, specially with receipts. A lot just set it aside instead of keeping it for record. Will have my staff and family read this. Thanks!

Marjie Killeen said...

Glad you found it helpful! Are you located in Killeen, TX or are you a long lost Irish relative of my husband?

Jean said...

nice post, i'm actually pondering getting a financial coach

Killeen Public Storage said...

I agree that monthly bills should be kept, specially utility bills and credit card bills. I often find myself needing last month's bills and forgetting where I placed it. Since then I've set up a storing shelf to stuff bills and a day to sort them all out.

Organize files said...

Shredding machines are essential in most offices and homes that can afford them benefit as well. In fact, considering how much identity thieves can do with just a bit of information about a client, I think all businesses should ensure that they use this type of equipment. It doesn't matter whether someone has a small business or operates from home, serving clients from there.

Amela Jones said...

When will you be doing another article on this subject? 

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