Houston Estate Planning and Elder Law Attorney Blog
Yes, you have an organizational style. It may be chaos, or it may be hyper-organized. Either way it is still a style. Moving from paper to digital feels more organized, but it also requires management.
There are a number of different ways to approach any problem, including getting financial documents in order. Some people pile papers in a stack, promising to get to them some rainy day that doesn't seem to arrive. Others are calendar driven, filing and shredding at the end of every quarter. Still others hoard documents, shoving them in overstuffed filing cabinets. Millennials keep nothing on paper, operating under the expectation that any needed documents will be easily downloaded when they are needed.
Morningstar's article "How to Organize Your Financial Documents" acknowledges that it's getting easier to go with option three and rely exclusively on digital resources to manage and track your financial accounts and pay bills. Financial services will remind us that paperless is the green way to go. Assuming you take some commonsense actions to protect against financial fraud, it can also be very safe. However, before you go the minimalist route, put some basic infrastructure in place with these steps.
Secure Your System. Moving your document storage from paper to digital is a vital element of getting your financial house in order. A big first step before you switch over is to be certain of the security of your home computer network with up-to-date antivirus and antispyware software, firewalls and a spam filter. A good system for periodic backing up of the data is also essential. Also, you'll need to password-protect your computer as well as sensitive documents. Finally, be careful about trying to access financial information when you're away from home. Never log into any financial accounts when using a public or unsecured network.
Create a Master Directory. Next, create a password-protected digital directory of your accounts with user names and passwords, websites, and information about where these files are on your computer. This document can be handwritten, but it's crucial to keep that document in a safe location—like a locked, fire-safe box or a safe-deposit box. Also, it's important to tell a trusted loved one of your master directory and how to gain access to it.
Investigate Your Providers' Information Systems. Do a quick audit of the quality of the digital statements provided by your banks, brokerage and mutual fund companies, and other companies with which you conduct business. Be savvy with your passwords for your information on external providers' sites.
Create a Logical Digital Filing System. When creating a secure environment for your sensitive financial information, create an intuitive organization system for digital files. Consider using broad topic folders like "Insurance," with subfolders for "Auto Insurance" and "Life Insurance."
Have a Plan for Your Receipts. Go ahead and recycle receipts for inexpensive, everyday purchases and scan receipts for items you might need to return or otherwise document the proof of purchase.
Stop It at the Source. If you're getting unwanted catalogs or other junk mail, contact the company and ask to be removed from the mailing list.
Pare Down Paper Files. You don't need bank statements from ten years ago, nor do you need a plumber's bill from a house you no longer own. Go through your existing files and shred what you don't need. Here's what you do need: certificates of marriage, birth and death; adoption papers; Social Security cards; deeds; and car titles. These need to be protected, either stored in a safe-deposit box at a bank or in an in-home fireproof box. Keep a copy of estate planning documents in your home, making sure to tell your spouse or trusted family member where they are. Include in those files contact information for your Houston estate planning attorney, CPA and other key professionals.
Reference: Morningstar (April 18, 2016) "How to Organize Your Financial Documents"