When creating a well-managed household budget, it is important to have good financial records to identify all sources of income and expenses. A financial record is any document (physical or electronic)  that reports the amount, the date, and the source of a specific transaction (an exchange of money, goods, or service).

For example when making a purchase at your favorite store, the store provides a receipt listing all the items purchased, applicable tax, the total amount paid, and any change given. The receipt also lists other information such as the location, date, time, and often sales person who assisted you. The receipt serves as a financial record (physical document) of the sale (transaction).

It is important to keep all receipts until that year’s tax return is successfully filed with the IRS.  For taxpayers who itemize their deductions, sales tax records are extremely important. If your small purchase (i.e. vacuum, toaster, or computer) comes with a warranty, keep the receipt until one year after the warranty period is ended. Staple receipt to warranty documentation.

It is recommended for large purchases such as vehicles, homes, and machinery, that receipts and original documentation are kept for the entire time of ownership. This is helpful for resolving any warranty or legal issues that may come up down the line.

If you haven’t been keeping up with your receipts, don’t panic.  Your bank and other financial institutions (401K, insurance, investments) provide monthly, quarterly, or annual statements regarding financial transactions that flow through that specific institution.

Expense accounts like your cell phone and utility companies provide statements of payment activity.  Always get a printed copy of financial records mailed to your home. Online access is great however if the world has a technology blackout or the company is cyber attacked, you will have a solid record of your accounts (income AND expenses).

You now have all this paperwork, documents, and receipts pilling up.. now what?  Find a file cabinet, dresser drawer, or storage box. Get 12 accordion folders, label one for every month, and place in the chosen cabinet, drawer, or box. When you receive a financial record (regardless of type), place in the corresponding month folder. At the end of the month when reconciling your bank account, secure all income records together and expense records together.

At the end of the year when your taxes are completed, remove all the records for all months and place in a large envelope along with a printed copy your completed tax return. Any unnecessary documentation should be discarded during the tax preparation process. Label the large envelope for that tax return year, seal it, and file in the back of your dresser, drawer, storage box, or fireproof safe.  

If you need assistance organizing your financial records, please contact Dr. GNP.

DR. GNP
ADVISE | TEACH | GOVERN
jennoa.graham@gmail.com  | www.drgnp.com

Please comment below and let us know how you organize your financial records! Do you have some challenges organizing financial records? Post in the comments!

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