Your Financial Future
It is important that you develop a system to collect and store financial records. These may be required to resolve disputes or for tax filings. While there are many ways to do this, there are certain standards that must be used. People often realize that this is important, but it is often put off until tomorrow because there may be other things that seem more urgent. However, if tomorrow never arrives because of a tragic accident, your family could be left with a giant mess to clean up,
The first thing you must decide is where you will keep these records. They must be in a safe, secure location, and there should be some kind of backup in place. Some people keep these records electronically on computers, and others use a paper filing system. Hopefully your system is more advanced than just an old shoe box, but that is actually better than many people just having papers scattered between different drawers.
Set up a system with different files or folders for different types of documents. Make sure that your loved ones know where your information is and know passwords if stored on an electronic device. It is also important to have a list of passwords to social media accounts and other places where they are required in the event of an accident.
Once you have your location selected, you must gather all existing documents and file them in the correct folder. The next step will be to place any new forms or information in the right place. You may have folders for things such as unpaid bills, credit card statements, warranty information, investment statements, tax returns and other information.
How long you should keep documents varies. Bank statements and credit card statements are often seven years. For tax records, keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.
When disposing of unneeded documents make sure you shred or burn sensitive information such as Social Security numbers, birth dates, account numbers and driver’s license numbers. These old documents could be a treasure trove for identity thieves.
It is important that survivors and heirs know how to access this information. Especially a surviving spouse needs to understand what assets and income sources will be available for the rest of their lives. They also need to understand debts and other outstanding financial obligations that they will be facing.
This understanding should happen long before necessary because decisions made for many things including when to start receiving Social Security can affect people for decades. Another important step in improving your record keeping might be to create a grab and go envelope for each of you. When someone is rushed to the hospital, you are always asked what medications they are taking, any allergies and surgical history. If you have this updated information in a red envelope with the correct name on it, you are ready to respond during this traumatic time.