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Home Rule

Set Up a Personal Financial Filing Plan

February 13, 1986|BONNIE McCULLOUGH

Setting up a personal and financial filing system takes little time and it takes just a few minutes a month to keep up to date.

The most important principle is to get all personal financial papers together. It might be stored in a kitchen cupboard, a dresser drawer, an expandable folder or a shoe box. If you are lucky, you may have a desk or a file cabinet, but they are not essential.

If you leave important papers on the coffee table or on top of the refrigerator and expect them to be there a month later, they might not be.

When you start looking and can't find them you may run the risk of making costly mistakes. If you do nothing more than gather these papers together, you will be better off.

Subdivide Into Categories

The next organizational step is to subdivide personal papers into smaller categories so they can be found faster. There are four kinds of papers:

--Irreplaceable or hard-to-replace papers that should be kept in a safe-deposit box, vault, or safe. Make photocopies to keep in home files.

--Dead storage is for active file papers three years or older. Keep copies of income tax returns and related information that substantiates entries on the tax return for seven years. Discard old salary statements after checking the W-2 form at the end of the year; canceled checks for cash or non-deductible expenses or non-warranty items, and warranties and coupons after expiration date.

--Action papers (pending papers) that you are still working with and that you will need to act upon soon, such as a budget plan and bills to be paid. Designate the first file folder in the financial file for pending papers or use a slot in the stacking trays or vertical dividers to keep action papers handy.

Slip in such papers as bills, mail order and credit card invoices, statements and premiums. Have a regular time each week or month to review these action papers. When the necessary action is completed, file the paper in the appropriate topic folder. If you have children, it probably will be helpful to have a separate action folder for each child for things such as yearbook receipts, athletic passes, transcripts and savings accounts.

Two Filing Methods

--Papers on hold that you need to keep for future reference or proof. Do not mix action and holding papers together. One plan is to use a set of 12 file folders, one for each month in which to gather data on accounts paid until the year is over and the tax return is filed. Then throw out the information that does not pertain to any entry on the tax form, and use the monthly folders again for the next year.

Another method is to file money papers according to subject. If just beginning, start with 25 categories for the holding file. Write one heading at the top of each file folder and sort non-pending financial papers.

The following are examples of papers on hold:

Paid bill receipts.

Current bank statements and canceled checks.

Paycheck stubs.

Car license and car tax data.

Log of car service and repairs.

Health benefit information.

Medical: paid bills, mileage, prescription drugs, dental, eye care, etc.

Credit card numbers and information.

Donation records: charity, church, public TV or radio.

Employment records, resume, history.

Education records.

Insurance policies.

Copies of wills.

Family health records.

Social security papers.

Manuals and receipts of items under warranty.

Household improvements (deductible from equity-profit at time of sale).

Inventory of safe-deposit box.

Loan statements and payment books.

Memberships and licenses requiring yearly renewal.

Investment or retirement plans.

Income tax working papers.

Copy of birth, adoption and marriage certificates.

Copy of divorce papers.

Funeral and estate plans.

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