Whether you want to make annual tax preparation a breeze or you’re preparing for an emergency, having an up-to-date set of important documents neatly filed and stored in a safe place is a great way to start the year off right.
The number of documents needing attention may seem overwhelming at first, but they can be easily tackled when sorted into groups and reviewed a few at a time.
These steps provide a simple plan to help you get started:
Build a Comprehensive List of Names, Addresses, and Phone Numbers
This may seem like an odd or unnecessary first step, but a list of resources could be an invaluable tool if one of your documents is lost or stolen in the future. Also keep in mind that in the event of an emergency, it may be a family member or close friend who will need to retrieve and access documents and information on your behalf. Your resource list can make that process easy and efficient for them if it is all-inclusive.
Compile and print a spreadsheet or create a five-column list by hand that includes the type of resource (i.e. bank, credit card company, insurance company, attorney, accountant, physician) and the account name, account number, company phone number, and company address for each. If you plan to keep original documents like birth certificates, marriage licenses, or deeds in a safe deposit box or other secured location, include that information on your resource list as well.
Review Insurance Policies and Prep for Related Documents
Assess each of your insurance policies and make sure that your coverage limits, deductibles, and coverage exemptions still align with your needs. Establish separate file folders or separate sections of a binder for each insurance policy and store your current policy paperwork in each. This will make it easier to organize any associated claim documents later if the need arises.
Separate files should be kept for:
- Health Insurance
- Life Insurance
- Homeowners Insurance
- Car Insurance
- Supplemental Insurance (flood, fire, earthquake, etc.)
Assemble Your Tax Documents
It’s never too early to corral all of the documents and receipts you’ll need in order to prepare your taxes. Receipts for tax-deductible donations, records of health insurance premiums and out-of-pocket medical expenses paid, records of child care expenses, earned interest statements, and any 1099 forms are ideal things to organize in this file. Along with the receipts and forms you’ll need for calculating deductions, payments, and expenses, you should also include a copy of your last tax return for reference when the time comes to complete your return for the most recent period.
Examine Your Bank Account Records
Are you paying fees for services that you could get for free? Have you outgrown the benefits your account offered you when you first opened it? Could you be earning more on your savings? A close examination of your account’s performance could hold the answer to all of those questions.
Banks are in constant competition to win your business. If your bank is no longer meeting your needs, compare it with others in your area. You may discover that you can reap surprising financial perks by moving to another institution.
When you are satisfied that your accounts are in good hands, create a file for important account paperwork and strive to keep your file current if any changes occur later.
Review Loans and Mortgages for Peak Performance
If your mortgage or personal loans are more than a few years old, you may be paying too much. Shop for current interest rates on comparable loan products and talk with your lender to learn if in-house refinancing is an option. Lenders will often offer an easier refinancing process if you are willing to keep your business with them rather than refinance elsewhere. Discuss the options available with them first if you are considering reducing your interest and monthly payments.
In addition to the account numbers and contact information recorded on your resource list, keep on hand an annual statement of principal payments applied, interest payments applied, and any escrow payouts for easy reference.
Assemble and Clearly Label Any Wills, Deeds, Trusts, and Powers of Attorney
Storing your originals in a safe deposit box offsite is recommended when it comes to legally-sensitive documents like wills, deeds, trusts, and powers of attorney, but you should keep copies of each of these records with your household documents for easy reference.
Is your will up to date? If you completed it when your children were young and they have since turned eighteen, or perhaps you have gone through changes in life such as a marriage or divorce, then it may be time to make some changes.
Remember, in the event of an emergency, responsibility for these records may fall to a trusted friend or family member. The preparation and planning you are doing now will make their duties much easier to manage later. This helpful checklist for storage of important documents is available for free from the Virginia Cooperative Extension and can help you make sure that nothing is overlooked.