Organization is important. Having a designated time and place to pay bills and store records will give you the assurance that you are in control. Set up your place for paying bills with all of the basics: pen, stamps, work space, and possibly a calendar. If you can’t or don’t wish to pay your bills as they arrive, a calendar, chart, or list is a must. You need to write on the calendar the due date and the name of the bill you need to pay. (If you use a computer to pay your bills, the software can probably be set up to remind you when a bill is due or to pay it automatically at the same time each month). Be sure to write the check at least a week in advance of the due date to avoid any chance of a late payment that could bring a penalty fee, or add a negative entry to your credit report.
You will also need a place to keep important information as well as the proof you’ve paid the bill. It can be as simple as a box wide enough to comfortably fit manila folders, or a file drawer. For the purposes of protecting against identity theft, it would be best if you had a drawer that locked so you can keep your various account numbers secure. You should have a file for each bill you pay. As you pay each bill, record the date you paid it as well as either the check or money order number. This bookkeeping may seem tiresome, but it is an important part of personal money management. In addition to keeping files, you may want to use money management software for maintaining your records. Even if you use a computer, you will need hard copies of many types of documents for complete information, and as essential evidence in case of dispute. What should you be saving?
• Bills. Bills are a record of what you owe. If the company overcharges you, it will appear on your bill. If you make a payment, it will appear on your bill. Keep regular bills in a separate file for quick access, and keep occasional bills in one location. Every time you pay a bill, note when you paid it, how much, and the check number or debit card information with which you paid.
• Insurance policies and bills. Documents from your insurance companies must be kept. They contain useful numbers in case you need to contact the company as well as a detailed list of your coverage in case the items insured are damaged or lost.
• Medical insurance and bills. Retain information about medicine, health insurance coverage, doctor visits, and any ordered medical tests you received.
• Home improvement or repair receipts. Keep information about any work you had done on your home or cars. This helps prove that you had the work completed if the work was paid for with insurance proceeds. It can also document improvements that may reduce your taxes when you sell your home.
• Important documents. Keep Social Security cards, birth certificates, shot records, medical files, passports, car registrations, dental records, etc. This file should contain any legal documents that identify you or create a contract, such as loan papers.
• Bank statements. Keep account statements from your bank. Some people find it convenient to buy a three-hole punch and save these in a notebook.
• Investment or retirement accounts. Keep account statements concerning any of your investment accounts. Normally, any investment firm will send you an end-of-year statement that lists all contributions and withdrawals made for the year. Keep monthly or quarterly statements throughout the year, then, when you receive your end-of-year statement, discard the monthly statements for that year. Always keep your end-of-year statements permanently.
Now, with these tips and ideas in mind you can begin to build a budget that works!
Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.