Here comes January! It is a time of year that we think of getting organized for the coming year. Preparing our taxes for 2015 encourages us to think about organizing and how important it is to have financial records in order.
A vital aspect of successful financial management is record-keeping. An effective record-keeping system should be convenient to use and not too complicated to maintain.
Financial records have become a vital part of life. They are a key to your credit standing, are essential to help you save money on taxes, and also are a continuing indication of your financial progress. If you have systematic plan for keeping track of important papers you can save hours of anxious searching, help preserve peace and harmony, and make it easier to cope with emergency situations.
Record-keeping is also important due to legal and safety factors. Many records and papers can be kept in a home file for ready access, while others should be left with your attorney; placed in a safe-deposit box; or put in a fireproof, waterproof, and burglar-proof home safe. A good rule to follow is to keep the item at home unless it is a legal document or is difficult to replace or duplicate. Then it should be kept in a safe-deposit box or possibly left with your attorney. Following Hurricane Katrina in 2005, many people have explored the idea of sending copies of very important documents to a trusted relative in another state, and also having copies in a fireproof or waterproof file that could be lifted at a moment’s notice. A number of systems are available commercially, or you can design your own (e.g., with file folders). It is important that the system makes sense to you and that you use it consistently.