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| ©2009 Joseph A Onesta, All Rights Reserved Integrity HPI -- 325 Clearview Avenue, Pittsburgh PA, 15205 -- 412-777-9821 |
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Keeping Financial Records
Keep it simple to keep it up.
Keep it simple to keep it up.
If you do not already have a financial record system, chances are that a detailed system will not work for you. So
keep it simple. Faulty financial record-keeping is one of the biggest underlying causes of failed budgets,
unachieved financial goals and times of stress over money. For many, record-keeping is unpleasant and for
some an onerous task. It does not have to be that way.
All you need to keep adequate financial records is a little dedicated time and a fairly simple system. When most
people buckle down and try to start keeping records, they make the system too difficult to sustain. All you need
to know from your financial records are three main questions. How much money do I have? Have I paid my
bills on time? How much do I owe?
For most people, between 15 and 30 a week is enough. The reason record-keeping takes some people hours
is because their system is either too complicated or they have to actually clean up a big mess before they get
started. The trick is to make it simple, to be ready and to do the work every week.
Set aside 30 minutes every week. Pick a specific time when you know you will be home and during which there
should not be a lot of interruptions. Pick the time carefully because you need to make it a priority and stick to it
religiously. It will take a while but once this practice becomes a habit, it will seem effortless.
Having a weekly, instead of monthly, record-keeping session accomplishes several important goals. You will
be able to spend less time during any one session. Depending on the number of bills that arrived during the
previous week, you may need only a few moments. Also, if you pay your bills within a week of receiving them,
you will probably never be late. You will also grow conscious as to when bills arrive. This will help you better
plan your spending so that the money is available when you need it. And lastly, your payment is due whether
you actually receive a physical bill or not. You should know about the bills you have and when they are due.
In order to be ready for your record-keeping session, you need several things. You need your bills and
keep it simple. Faulty financial record-keeping is one of the biggest underlying causes of failed budgets,
unachieved financial goals and times of stress over money. For many, record-keeping is unpleasant and for
some an onerous task. It does not have to be that way.
All you need to keep adequate financial records is a little dedicated time and a fairly simple system. When most
people buckle down and try to start keeping records, they make the system too difficult to sustain. All you need
to know from your financial records are three main questions. How much money do I have? Have I paid my
bills on time? How much do I owe?
For most people, between 15 and 30 a week is enough. The reason record-keeping takes some people hours
is because their system is either too complicated or they have to actually clean up a big mess before they get
started. The trick is to make it simple, to be ready and to do the work every week.
Set aside 30 minutes every week. Pick a specific time when you know you will be home and during which there
should not be a lot of interruptions. Pick the time carefully because you need to make it a priority and stick to it
religiously. It will take a while but once this practice becomes a habit, it will seem effortless.
Having a weekly, instead of monthly, record-keeping session accomplishes several important goals. You will
be able to spend less time during any one session. Depending on the number of bills that arrived during the
previous week, you may need only a few moments. Also, if you pay your bills within a week of receiving them,
you will probably never be late. You will also grow conscious as to when bills arrive. This will help you better
plan your spending so that the money is available when you need it. And lastly, your payment is due whether
you actually receive a physical bill or not. You should know about the bills you have and when they are due.
In order to be ready for your record-keeping session, you need several things. You need your bills and
and checkbook at hand. You need previous bills and statements close by. And, you
need to be near your computer or have a calculator handy. You do not need a fancy
filing cabinet, a cross-reference index or a spreadsheet that calculates compounded
interest. Most people keep this regalia in a box, drawer or file cabinet. They keep it all
together so when record-keeping time comes, it is all in one place.
During the week, take all the bills and statements that arrive through the mail and put
them in a special place. You may also want to toss in receipts that you want to keep
and file away. A shoe box works really well but you can use a decorative basket or
even a real in-box if that makes it feel more official. Just remember that you should
not put anything in there but bills and statements. You do not want to spend
record-keeping time sorting through junk mail.
need to be near your computer or have a calculator handy. You do not need a fancy
filing cabinet, a cross-reference index or a spreadsheet that calculates compounded
interest. Most people keep this regalia in a box, drawer or file cabinet. They keep it all
together so when record-keeping time comes, it is all in one place.
During the week, take all the bills and statements that arrive through the mail and put
them in a special place. You may also want to toss in receipts that you want to keep
and file away. A shoe box works really well but you can use a decorative basket or
even a real in-box if that makes it feel more official. Just remember that you should
not put anything in there but bills and statements. You do not want to spend
record-keeping time sorting through junk mail.
In today’s debit card dominated world, for the sake of simplicity I suggest two bank accounts--one for paying
bills and the other for use as cash. This makes reconciling simple. If you have a separate cash account that
you use for shopping, you will not have to reconcile all those tiny transactions before knowing that you have
enough money to pay your bills. You should, of course, be updating that checkbook record every time you use
your card but years of experience tell me that is a tall order for most
people. So, have a separate account for paying bills. Make sure you
keep enough money in the account to pay all your bills and never use
that account for anything else.
As you pay each bill, keep only the statement part. Recycle everything
else. Write on each statement the date you paid the bill, the amount
of your payment and the method, either your check number or your
on-line bill pay and update the check-book register each time. Double
check your calculations.
Also file important receipts. Major purchases, items with a warranty
can go in one file. I usually staple them to the warranty information,
instruction booklet or owners manual and then keep them in a box
in a closet. Tax-deductible receipts can go into a separate file for tax time.
Once you pay a bill, file the statement with the rest of the statements
for that account. Whether you place them in a file folder or you hold
them together with a rubber band is not important. What is important
is that, should you need to, you can check to see when you last paid
that bill by simply checking the file.
Do not use credit cards to pay your bills! Using credit cards to pay bills only results in more bills and increased
costs in terms of interest.
Automatic bill paying services seem like a good idea for someone who is not good at keeping records. After
all, at least bills get paid on time but there are some hidden dangers that you should know about. You still
need update your account records every time a payment is made. Unless you set up a specific payment
amount, payment systems will pay only the minimum balance due maximizing the interest you pay. Also
divorcing yourself from looking at statements and bills each month allows billing errors to slip by. And finally,
not being aware of your expenses and your debt obligations is absolutely unhealthy for your finances.
I find it helpful to keep paper as well as electronic records only because I have found myself needing
information when I did not have access to a computer or needing information that is older than those records
accessible free though my on-line bank. I have experienced corrupted files, inadvertently deleted files and
failed to save updates. Always put a password on your electronic files.
Once you have mastered a simple record-keeping system, you will likely add more detail to it later. It is all right
if you build upon this easy and simple foundation but give yourself plenty of time with simplicity. It may be all
you need.
bills and the other for use as cash. This makes reconciling simple. If you have a separate cash account that
you use for shopping, you will not have to reconcile all those tiny transactions before knowing that you have
enough money to pay your bills. You should, of course, be updating that checkbook record every time you use
your card but years of experience tell me that is a tall order for most
people. So, have a separate account for paying bills. Make sure you
keep enough money in the account to pay all your bills and never use
that account for anything else.
As you pay each bill, keep only the statement part. Recycle everything
else. Write on each statement the date you paid the bill, the amount
of your payment and the method, either your check number or your
on-line bill pay and update the check-book register each time. Double
check your calculations.
Also file important receipts. Major purchases, items with a warranty
can go in one file. I usually staple them to the warranty information,
instruction booklet or owners manual and then keep them in a box
in a closet. Tax-deductible receipts can go into a separate file for tax time.
Once you pay a bill, file the statement with the rest of the statements
for that account. Whether you place them in a file folder or you hold
them together with a rubber band is not important. What is important
is that, should you need to, you can check to see when you last paid
that bill by simply checking the file.
Do not use credit cards to pay your bills! Using credit cards to pay bills only results in more bills and increased
costs in terms of interest.
Automatic bill paying services seem like a good idea for someone who is not good at keeping records. After
all, at least bills get paid on time but there are some hidden dangers that you should know about. You still
need update your account records every time a payment is made. Unless you set up a specific payment
amount, payment systems will pay only the minimum balance due maximizing the interest you pay. Also
divorcing yourself from looking at statements and bills each month allows billing errors to slip by. And finally,
not being aware of your expenses and your debt obligations is absolutely unhealthy for your finances.
I find it helpful to keep paper as well as electronic records only because I have found myself needing
information when I did not have access to a computer or needing information that is older than those records
accessible free though my on-line bank. I have experienced corrupted files, inadvertently deleted files and
failed to save updates. Always put a password on your electronic files.
Once you have mastered a simple record-keeping system, you will likely add more detail to it later. It is all right
if you build upon this easy and simple foundation but give yourself plenty of time with simplicity. It may be all
you need.
