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How To Handle Your Paperwork Prudently - Outside View by PersonalFN

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How To Handle Your Paperwork Prudently
Aug 31, 2017

Many people find paperwork tedious and procrastinate on organizing their personal, financial, and miscellaneous documents. This causes unnecessary stress in the long run, leaving you overwhelmed when the paperwork is required to be submitted.

Neeta, a professional wild-life photographer, was fed-up with the clutter but would not make any efforts to clean-up the mess. It was only when she needed some documents urgently for African Visa application and couldn't find them, she realised the importance of documentation.

Louis Fried, MIS expert and highly respected author, once rightly said - If it is not documented, it doesn't exist... As long information is retained in someone's head, it is vulnerable to loss.

In this article, PersonalFN discusses the basic steps you can take to ensure your paperwork is in order.

Step 1: Sit down and segregate all the bills and receipts

The first step is to sort out all the documents that are important and ones to be discarded right away. Not all papers need to be stored forever and some need to be kept only for a particular period.

Keep all the bills and receipts in one box and important documents in another.

Dining, grocery, entertainment, fuel and travel bills are a part of your day-to-day expenses and need to be recorded. Similarly, not all receipts are important; for example, ATM withdrawal slips, bank deposit slips, old cheque books, expired credit and debit cards, membership cards, etc. should be disposed of right away.

A lot of times, we have a habit of collecting the fancy brochures and pamphlets. These are unnecessary papers occupying space in your drawers and need to be thrown out today.

However, you might need some bills like pharmacy bill, insurance payment receipts, your travel tickets, fuel bills, etc., to claim the expenses for tax deduction purposes and hence should be filed away safely.

Step 2: Categorise the documents further

Next categorise your documents and store them accordingly. You can record everything into one portfolio folder which has several separate files in it with a mark-up.

All your personal documents like your PAN Card, Aadhaar Card, Passport, Voter's ID, Driving License are to be stored with utmost care. These identification and citizenship proofs will be necessary throughout your life and hence, very crucial.

Your estate documents such as buy and sell agreement, rent agreement, rent receipts, stamp duty and registration receipt, share certificate, loan statement, loan re-payment statement and acknowledgement letter from the bank and the society should be maintained in one file.

Likewise, your investments and money related documents such as mutual funds holding statement, fixed deposit certificates, bank passbooks and account details, insurance and medical policies, PPF account passbook, etc should be handled prudently. Also, the cash transaction receipts above Rs 2 lakh should be maintained as proofs in case if tax related query arises. These documents should be placed where it is easy to access as we might need them often.

Another important category is taxation, and documents such as Form16, bank statement, loan statements, HRA supporting documents, charity receipts, proof of investment, etc. are financially sensitive information to be filed carefully.

Also, your employment related papers ( offer letter, appraisal letter, experience and relieving letter, bonus letter, salary slips, appreciation mail, achiever's certificate, etc) and academic record (mark sheets, certificates, leaving certificates, convocation certificates etc.) should have respective files. These documents might look too old to be important at times, but are to be maintained lifelong.

Certificates such as, birth, marriage, death, domicile and school leaving are most accessible when placed together in one file.

Documents like warranty cards of home appliances are needed only until the warranty period lasts. However, appliance manuals can be saved till the machine is running. However, if the purchase was made on an EMI basis, then you also need to store its bill safely until your term period is over.

You should also maintain a separate medical record that has all your prescription, test results, and everything about your health in one place. Prescriptions are often kept recklessly and hence lost easily. But it is among the most important documents to be maintained to keep a track record of your medical history. Remember, health is wealth!

Your medical insurance payment receipts and related documents are crucial in times of hospitalisation or medical emergency. Many times, the claims are rejected/delayed due to incomplete paper work.

Step 3: Regular maintenance

Once all your documents are filed efficiently, you need to check and rearrange these at regular interval to maintain it categorically. Keep adding documents into their respective files and location.

Organise your documents further as monthly, quarterly, half-yearly, and annually. Also monitor your investments at least every six months and take actions as and when needed. If there is a change in any of your personal details, update your KYC details wherever necessary.

Important points to note

  • Carefully dispose of important details
  • Please be careful while disposing any of the unwanted paper. Make sure that all the passwords, account numbers, expired cards; are carefully disposed as this is the most common way of hacking and theft.

  • Involve a family member
  • Also, it is very important to involve your spouse or a family member in your financial decisions and plans. Life is uncertain and you certainly would not want your family to be in a difficult situation in case of your demise. It is better to be organised first, then hassled at the time of difficulty.

    Another important thing is to appoint your nominee or legal heir, and write at least a simple will. Try to get rid of heavy debts as soon as possible

  • Store your documents smartly
  • A conservative way to store these documents is to keep it in a safe or may be a bank locker, or a safety vault. However, with the blessing of technology advancing these documents can also be stored virtually either in a bank e-locker, cloud storage, computer, etc. Another way is to maintain a scanned copy of these documents in your mail-box, personal computer, or in any such other secure location.

    Finally remember, that disciplined paper work can make your life easy. Take steps in the right direction today in the interest of your wellbeing.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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