Going to the gym regularly or quitting smoking are popular New Year’s resolutions, but some are easier to stick to than others. If organizing your finances is one of your goals, here’s a checklist that should help get you started:
● Back up your records: If you are keeping all your bank records, financial statements and tax returns on your computer, make sure you have at least one back-up. And your back-up should not be kept in the drawer by your computer, in case of fire. Make sure your back-up lives at another location and is secure.
● Tax return purge: You only need to keep the last six years, so you can shred your 2006 tax return on January 1, 2013. Keeping paper copies of the last seven years of tax returns is a requirement even if you filed electronically.
● Safety deposit box check-up: A safety deposit box is a good idea for important documents and other valuables. For example, if you complete a personal inventory, keep a copy in the box. And in some cases the annual fee can be claimed as an investment expense on your tax return.
● Important document inventory list: Not that anyone plans to have something bad happen, but you should have a list of your bank accounts, investments and where to find important documents like insurance policies. This will make it easier if someone needs to become involved in your affairs. You may want to keep the list in your safety deposit box.
● File your paperwork: Even though we were promised a paperless future, banking and financial records still seem to require a lot of paper. If you have everything in a pile, it is worth investing in a file box and organizing your paperwork. And then it will be easier to file paperwork as it arrives.
● Start a 2013 tax file: Your focus may be on your 2012 tax return but starting an envelope or folder for 2013 is a smart idea. Having all your tax-related information and paperwork collected in one central folder should make filing your 2013 tax return easier.
If you are discarding financial documents, make sure you use a shredder. Many documents will contain personal information that could be used to steal your identity, so do not just add your discarded paperwork to your recycle bin.
Taking some time to organize your financial paperwork may not be the most exciting New Year’s resolution, but it can make life easier. And it could mean peace of mind if the Canada Revenue Agency asks for a slip or receipt to prove a claim on your return.