Family finances:
Managing your paperwork

It doesn�t take a lot to keep on top of the paperwork. You need to set aside some time and some storage space.

Ideally you need to keep all your important paperwork in one place, such as a filing cabinet or even a large box, then you will know exactly where to look for anything you need. If you keep basic stationery here as well you will have a �one stop� administration location! Most organisational experts recommend trying to keep everything you need for a task in the area you will be carrying out that task. It sounds obvious but, unless you have a room or area as a study or office already, you probably write your letters at the dining room table or a computer desk, the envelopes and stamps are stuffed in a drawer in the kitchen and all the pens are down the back of the sofa!

Set aside a regular time each day or week to deal with your post and stick to the rules:

Read it

Action it then file it, or

Bin it.

If it needs dealing with, deal with it there and then and file it. If you don�t need it, bin it. You will waste a lot of time and energy if you keep picking up the same piece of paper again and again without actually dealing with it and you also run the risk of missing any deadline if you keep postponing the task.

If you need to complete a tax return, keep a separate wallet for the information you will need such as interest received, dividends received and your pay or earnings. If you file each item as you receive it, you will have all the information in one place either to complete your tax return or to hand over to your accountant when the time comes.

Another important area is the completion of the stubs in your chequebooks and paying in books (which should then be retained with your bank statements). It may seem like a pain at the time but will save a lot of heartache in the future when you are trying to identify the amounts. We often come across cases where HM Revenue & Customs want an individual to identify all receipts into bank and building society accounts for a period of year or more, sometimes more than two years ago; and no one�s memory is that good. Record the details at the time and the problem is solved.

Suggested filing categories for your personal records might be:

Financial for tax returns � details of your income and any capital gains

Other financial � such as credit cards, mail order accounts, loans, subscriptions

Household � such as utility bills, telephone bills, council tax, insurance, TV licence

Car � such as insurance, servicing, repairs

School � such as details of trips, meetings, fund raising

Receipts, guarantees and instructions � for major purchases and household appliances

Important documents � such as passports, birth certificates, marriage certificates, medical details

Miscellaneous � such as mail order catalogues, holiday brochures, magazines and those recipes from the Sunday magazine you really like but will never actually make!

It can be as simple as a folder for each item or a filing cabinet drawer, sub-divided for each heading. Everyone�s needs will be different. The key is to keep everything in one place so that if you are looking for something you don�t have to hunt through the whole house. In the case of magazine cuttings you are far more likely to refer to them if they are filed in plastic pockets rather than piled up randomly in corners.

There is no legal requirement to keep personal records other than those used to complete your tax return which must be kept for at least 22 months after the end of the tax year they relate to, or a year after the submission of your tax return if longer. It is however worth keeping as long as possible if you have the space.

If you run a business, the business records should be kept separate from your personal records. Click here to go to the Your business section where there is more information on accounting systems and business records.

Your business records may need to be kept for up to 7 years. Keeping your personal records for the same length of time may be helpful as if HM Revenue & Customs enquire into your business affairs they may also want to see your own records such as bank statements or credit card statements for the same period.

A history of your household bills can be useful to demonstrate the level of running costs when you sell your house.

You might decide to have a separate box for long term storage. At the end of each year you can transfer documents from current storage to the archive box. You may also decide to throw out some records from the archive box that you no longer want, for example you may decide to keep credit card statements for two years and destroy them after that but keep bank statements for five years.

The system can be as simple or as complex as you want it to be. Generally the simpler the better as you are more likely to keep to a simple routine.

Setting up the system

Decide on your filing categories and how long you are going to keep those documents, for example:

Financial for tax returns

Documents:

all details of interest, dividends, salary, sale of shares, etc.

Keep for:

at least 22 months (by law) with a copy of the completed tax return.

Other financial

Documents:

credit cards, mail order accounts, loans, subscriptions, bank statements

Keep for:

keep current year easily to hand and keep previous year's details for at least one year.

Household

Documents:

utility bills, telephone bills, council tax, insurance, TV licence

Keep for:

keep current year easily to hand and keep others for length of ownership of house or, say, five years.

Miscellaneous

Documents:

mail order catalogues, holiday brochures, magazines etc.

Keep for:

until you can't squeeze any more in then, throw away anything that's out of date.

Organise your storage for current documents and a box for storing older documents. Keep a diary or calendar by the phone to jot down telephone messages under the relevant date so they don�t end up on scraps of paper all over the place and you will actually be able to find them again. As well as your personal address, book keep details of plumbers, decorators etc that you use in one place so you can find them when needed. (When water is flooding through the ceiling you don�t want to be ransacking the house for a phone number!)

Establish a regular routine, such as:

Daily

Open post
Deal with it if urgent or put it into filing tray for action at the end of the week, or bin it.

Weekly

Go through tray and action everything in it.
Keep copies of correspondence and notes of telephone calls (time, date, who you spoke to, etc.)
Get into the habit of checking entries on credit card bills and bank statements � it may be wrong one day!
Keep a folder for things you need a reply to and check it to see if anything needs chasing.

Do not carry things over from one week to the next unless it really is impossible to deal with it there and then (be honest!)

Annually

Prepare and submit your tax return if applicable
Move documents to the archive storage as necessary.
Sort through the archive storage and destroy any you no longer want/need.

The key to managing your paperwork is to deal with it on a regular basis so it doesn�t get out of hand. For some people it becomes a hobby in its own right with a wealth of computer spreadsheets and colour coded wallet files. Organise it to suit you, but organise it!