How to set your financial records straight

Posted at 05/26/14 11:01 AM

MANILA, Philippines - Did you ever have to replace a malfunctioning gadget but couldn't claim a warranty because you've thrown away the receipt?

Have you applied for a travel visa and found yourself unable to produce bank statements because you don’t even know if you have those?

Have you had to avail of medical insurance but couldn't tell the hospital your account number?

Keeping financial records can be quite a chore, given the volume of papers that we have to track. Yet it is something you cannot avoid and will have to do. It is also one of the most important, yet often overlooked, aspects of personal finance management.

There are definite advantages to keeping and organizing your records. You save time, money and avoid inconveniences that may arise when you suddenly need documents to prove your identity or your financial capability for various reasons -- to get travel documents, use pre-need plans, apply for credit cards and loans. For financial planning purposes, having records are the first step to help you monitor your expenses, your spending behavior, and better understand or predict your cash flow.

Understandably, you wouldn't want to keep all records forever, so you need to think about what records you should keep, how you should keep them, and for how long.

There are some records that you instinctively know you should keep: proof of ownership of property, certificates of deposit, government-issued documents such as certifications, service warranties, tax payments, and the like. There are others that you may want to hold on to for a given period of time before disposing of these.

For instance, you can keep receipts of items you’ve bought using your credit card for reconciliation purposes until the statement arrives, then dispose of it. You can wait till you get the annual summary of your investments before throwing away your quarterly statement of accounts, and hold on to home, car, and medical insurance policies until they are renewed.

On the other hand, receipts for significant purchases like jewelry, appliances, and cars — along with corresponding service contracts and warranties— must be kept while these are in your possession. Tax records and their supporting documents should be retained for generally three years, coinciding with the 3-year statute of limitations, although some tax consultants have advised businesses to hold on to their tax records for as long as 10 years.

Here are some ways to help you with record-keeping:

Spend a few minutes every week to go through your records, paying special attention to those that are time-sensitive such as bills and payments. If you run a home office, make sure you do not mix your personal records and your home business records.

Have a temporary record storage area.

If you do not have time to check records daily, you can try to have an expanding envelope where you can temporarily stuff all receipts, statements or documents that you are unable to check or sort right away. It may be a good idea to have another smaller envelope specifically for important records in your bag. Put documents that you receive in the course of the day – at the office, for instance -- in this envelope, then transfer the contents of this to the expanding envelope you have at home. At the end of the week, go through the contents of this temporary file storage and sort out its contents.

Think of a filing system to categorize your records.

Make sure that this would fit your lifestyle and that you are comfortable with it. One way is to arrange your files according to date and category. Another example is to arrange them in four groups: Active File, Inactive File, Important Papers, and Throw Away.

The Active File consists of documents vital to the everyday operation of your household. These papers should include: appliance manuals, warranties, and service contracts (including their receipts); bank statements; bill payment receipts; billing statements (from utility and credit card companies, among others); credit card information; employment records; health benefit information; insurance policies (car, home, and life, among others); loan statements; safe deposit box inventory (and key); tax receipts

Inactive File. Documents from the Active File that are three years and older can be transferred to the Inactive File.

Important Papers are those that are irreplaceable or difficult to replace. These documents include: Certificates of deposit; contracts; deeds and property titles; life insurance policies; passbooks; Power of attorney; stock and bond certificates

Throw aways are those that have you have no need for . This would include expired insurance policies, receipts that are of no consequence, billing statements that have long been paid for, etc.

Label your records for easy reference.

For example, documents pertaining to your property could fall under “Real estate assets” while utility bills could be marked as simply “Utilities.”

Have back-up files of your most important documents.

Have photocopies or scanned copies of your passport, property titles, and investment certificates that you can store electronically. Alternatively, you may take photos of these using your smart phone. There are many apps that now allow you to store images of your records using the cloud.

Keep a list of the documents that you have.

Over the years, you may no longer remember what you have. This list will make retrieval easier and faster.

Originals of important records must be kept safe and secure in a secondary location like a safe deposit box at the bank, which you can avail of for a minimal fee. If you prefer to store them at home, then you must do so in a fireproof and waterproof safe. Place the documents in Ziploc bags or other airtight waterproof containers before putting them in the safe.

Let your spouse or closest next of kin know where to look for the most important records in the event that you are not physically present to retrieve these. If your original documents are in a bank safety deposit box, you might want to have a Power of Attorney left in an easily accessible place for them to access your safety deposit box in your absence.

When disposing of financial records, take the necessary precautions to protect your personal and financial information against identity thieves. Tear these documents into little pieces or get a portable paper shredder to help you dispose of stale documents.


Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

Visit www.citibank.com.ph for more information.