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Personal Finance Organizer
The MMI Online Articles are designed to inform, assist, educate and alert consumers.
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If you find yourself knee-deep in paperwork, take the time to sort out the chaos. Clearing out the clutter will make organizing your personal and financial records a whole lot easier. But before you bulldoze that pile, you should know that some things are worth hanging on to. The key is to know what keep and what to toss.
- Grocery receipts and other nondeductible expense receipts and statements can be destroyed after they have been recorded for budgeting purposes.
- Paycheck stubs should be checked against your W-2. If it’s a match, you can toss them. If not, request a revised W-2, called a W-2c.
- Generally, canceled checks should be saved for three years. Keep those related to your taxes and business expenses permanently.
- Utility bill stubs may be destroyed after recording, however, you may wish to hold onto these for a year to compare monthly costs.
- Documents pertaining to buying, selling or improving your home should be kept as long as you own the home.
- Receipts from major purchases should be kept as long as you have the item.
- Credit card receipts can be destroyed once you have reconciled with your monthly statement. Additionally, credit card monthly statements can be destroyed on an annual basis.
- According to the Internal Revenue Service (IRS) you should keep your individual tax return documents for seven years. The IRS has three years from your filing date to audit your return if it suspects good faith errors. However, the IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more.
Finally, before taking out the trash, be sure that all identifying information has been destroyed to avoid any threat of fraud. To keep your most valuable documents safe, consider opening a safety-deposit box at your local bank or credit union. For organizing paperwork, used office supply stores offer great bargains on filing cabinets, or consider small plastic filing cabinets instead of metal or wood. If your goal is have a paperless filing system, make sure that you back-up your computer regularly and invest in a good security program to prevent criminals from obtaining sensitive information.
Getting your financial house organized is a great way to reduce stress and reduce costly mistakes that eat into your disposable income.
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