We are sure that many of you are so organized that you never lose your class notes, your homework, or your umbrella. If you are one of these students, then you need to do the same with your financial papers. If you are not one of these students, then you may a larger barrier to cross but now, when you are young, is the best time to treat yourself to the beginning of an organized financial life.
The National Endowment for Financial Education (NEFE) suggests organizing your financial files with folders and, yes, manila folders work. In 2011, some of these may be best kept on the computer – assuming you back-up your files. The main thing is to get organized and you may wish to consider having a locking file box or a locked drawer or closet for your financial papers. The following organizational structure is suggested as a starting point. They are, in alphabetical order:
Banking – Collect your bank statements and copies of checks in a folder or, perhaps, a three-ring binder. Many banks have electronic services where records may be kept on their servers. Remember to print them out, if you change banks and the records are less than three years old.
Bill to be paid – This is a good one to keep handy. Making timely payments to your creditors, utility company, cell-phone provider, cable television supplier, and other vendors is crucial to establishing and maintaining your credit rating.
College – It is a good idea to maintain your own records about your courses, grade reports and credits earned should questions arise. This is increasingly important when you complete your education and have a job that requires continuing education credits.
Financial Aid – Keep copies of your financial aid and scholarship applications, essays you’ve written, award letters, and notes about telephone conversations.
Insurance – Have a file for your automobile, medical and renter’s insurance policies. Before you put the file away, read over the main points of the policies and double-check to assure that you are adequately insured.
Loan and Credit Records – File each of your loan agreements with your payment records for student loans, credit card loans, auto loans, home loans, or whatever loan you may have. Keep the paperwork here. Think hard, however, before you take out any consumer or student-loan debt. When it is time to pay the loan, the payments will always be less fun than the spending. While you are a student, your number one job is to earn your degree – not work excessively so you can make payments on your loans.
Receipts and Warranties – Have a file for receipts for major purchases, such as computers or electronic equipment.
Savings and Investments – This is the file you want to see grow. Keep statements with respect to each savings account and investment account. A separate file for each account is considered best.
Taxes – Each January, start a new file for anything that has, or you think could have, anything to do with your tax returns here. This includes the obvious such as W2 forms, pay stubs, receipts for charitable contributions, 1099 forms, as well as receipts for medical expenses and investment expenses that might be deductible, should you be able to itemize your deduction. (Until you purchase a home and have a mortgage, you are not likely to itemize.) If you are not sure if an item needs to be kept for taxes, keep it. It can always be thrown away later but it can be an aggravation to replace it.
Records can be very special to you. Some are difficult to replace; such as your birth certificate, Social Security card, marriage license, military discharge papers, wills, trust documents, power of attorney documents and et cetera. Items such as this should be stored in a safety deposit box in your bank or, if not, a fire-resistant box or vault in your home. This can include some unlikely belongings, such as the George Brett rookie baseball card a friend of mine gave me to pay for my son’s college education. It did not.
In closing, the best thing about record keeping and being financially organized is that you begin the disciplined practice of doing your part to assure that you have the best chance of reaching financial success. George Brett had a lifetime batting average of .305 – or three hits for each ten times he appeared at the plate. Your chance of financial success is less than this, if you are not organized and aware of your financial life.