keep tabs On finances
by ADELIA CELLINI LINECKER
Investor's Business Daily
Keeping your finances in order hardly comes naturally to most people. But de-cluttering money madness is crucial.
Your financial needs constantly change, whether you need to save for your children's education, invest for retirement or pay down a mortgage. Keeping good financial records lets you make those changes effectively. In many cases, you can keep track of your money on your own. Plenty of software programs make this task easy.
"ThePaperTiger.com, Quicken, Money, QuickBooks, Or-Fin or PaperPort Pro Office, to name a few, give you a complete overview over your financial situation," said Kim Wolinski, a professional organizer.
Certain situations warrant professional help. "The two greatest forces in personal finance are inertia and apathy," said Jordan Goodman, a personal finance expert and author of "Everyone's Money Book on Financial Planning." "If (those words) describe you, you need a professional."
If you need a little advice to get started or stay on the right track, here are some tips:
Create a system. Go through your mail every day and immediately throw out junk. Put bills and other financial items that need immediate attention in a highly visible basket or folder. Put the rest in another folder you will revisit at the end of the week, Wolinski says.
"Everyday receipts, billing statements and important documents need to be reviewed for correctness, then filed if used for income-tax deductions," Wolinski said. "Create a filing system with each category necessary ... and put the paperwork away on a daily or no more than a weekly basis."
You can scan your receipts into a computer file if you don't want to keep the receipts, she adds.
The key to any system is using it regularly. Mark out a time when you will do paperwork, and make sure nothing can disturb you.
"Ninety percent of life is maintenance," Wolinski said. "With any folder type system, you still need to maintain it once a week, certainly once a month. Don't wait for the end of the year."
Reduce paper pile-ups. If you have any stocks, bonds and mutual funds, you are inundated with prospectus. "Unless you plan to act on them within the next two weeks, you can toss them," Wolinski said.
Some statements are best kept indefinitely in order to determine your retirement benefits, she adds.
Update investments. Financial institutions change the way they do business. Fees, management expenses and commissions can change, and that's an important reason to keep tabs on your investments, Goodman says.
"The average person should check their investments once a quarter," he said. "A lot of people don't even open their statements."
Create storage space. Tax returns and supporting documents need a long-term home in case the Internal Revenue Service comes calling. The IRS says keep copies of federal tax returns and supporting documents at least three years, seven to be safe. These include W-2s, pay stubs, records of charitable contributions and mutual fund statements.