Financial independence is a destination. Like any journey, the route starts with your current location. The process of organizing your financial records is crucial. You can’t make proper decisions if you can’t accurately gauge your progress.
In 100 words or so, here’s my first step in the personal finance process.
Organize your financial records (paper or electronic). In my opinion, it is more important to be paperless. I prefer Dropbox. But if you like paper, use a folder system.
Set up a system for filing financial documents
- Bank statements
- Financial statements
- Debt statements
- Investment account statements
- Tax returns
- Mortgage and credit card statements
- Insurance policies
- Estate planning documents
- Deeds, titles, surveys
- Household inventory (take video)
- Charitable donation receipts
- Credit reports
- Warranties
- Receipts (large purchases & home improvements)
- Utilities
Finally, create a Master Document explaining all the documents you have and any key information you might need to remember as time goes on.
Of course, you may have other documents I haven’t listed. The bottom line is to put everything you have out in the open and set up a system for getting at the information, easily and quickly.
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