Why It’s Important To Keep Proper Financial Records
In the modern era, where digital transactions are gradually replacing paper bills, keeping good financial records becomes an essential skill. Whether it’s sorting through stacks of traditional paper bills or managing countless online transactions, maintaining an organized record of your financial dealings can save you time, money, and a significant amount of stress.
The Importance of Keeping Good Financial Records
Organized financial records not only help you keep track of your income and expenses but also simplify your tax preparation process. Moreover, knowing where your important financial documents are can be a great stress-reliever.
The Move Towards a Paperless World
With advancements in technology, more and more people are shifting towards maintaining electronic records. This not only saves paper but also offers a more organized and efficient way of managing documents.
Organizing Electronic Documents
To ensure easy access to your records, you can:
Create Folders: Organize your documents categorically in different folders on your computer. These folders could be marked as ‘Tax Records’, ‘Bank Statements’, ‘Mortgage Documents’, etc.
Keep Emails Organized: Set up folders in your email account to store important financial emails. If you receive text alerts or confirmation numbers, forward them to your email and save them in the designated folder.
Back Up your Files: Always keep a backup of your files on an external hard drive or cloud. With computers being prone to crashes, having a backup can save you from the tedious task of recreating records.
Use Smartphone Apps: There are numerous apps available to help you manage your finances. These apps can send you reminders for bill payments and alerts for low balance or credit limit.
Scan Hard Copies: If you have physical financial papers, scan them and save them to your computer.
Tip: Always remember to keep your electronic documents password-protected for added security.
Managing Paper Records
Despite the digital shift, some people prefer keeping paper records. Here are some tips to keep your paper records organized:
Keep Separate Files for Each Category: Organize your documents in labeled folders, similar to electronic records.
Store Documents in One Place: You can use a large binder to store all your documents. This not only organizes your files but also saves space. Use tabbed dividers for easy access to documents.
Store Sensitive Documents in a Safe: Certain documents like birth certificates, passports, and important account numbers should be stored in a safe.