The Money Management
What to keep, what to toss
We stick them in shoeboxes, accordion files and overstuffed
envelopes, all in the hope of being able to find our important papers
and records should the need ever arise. But when the time comes, are you
left sorting through ten-year-old receipts or trying to remember where
you stuck that contract or agreement?
When it comes to organizing our records, many of us
have great intentions but are guilty of plain laziness. What can start
off as a small pile of paper and the thought "I'll just put this here
for now and sort through it later" can quickly turn into a paper mountain
and the realization "I'll never have the time to get through that". Out
come the shoeboxes and away go the good intentions.
The keys to a good record organization system are really
very simple. First, remember that it will take time and patience to sort
through papers that have been accumulating for years. As a simple rule
of thumb, it is wise to keep anything that you think is important or that
you may need to refer to in the future. It is just as important however
to make sure that you don't keep everything. Secondly, throw out any old
papers that you no longer need. Not only are they taking up valuable space
but they only add to the confusion when searching for something in particular.
The final key to good record organization, and perhaps
the easiest, is to invest in the proper organization equipment. A filing
cabinet is a great place to keep your replaceable records and the two-drawer
variety will fit under a table or desk, which keeps it out of the way
but still handy. Hard to replace records (including computer disks) can
be kept in a fireproof home safe, which works much better than a plain
metal box. While the metal boxes may look impressive, the protection they
offer in a fire is virtually non-existent. For records that are irreplaceable,
it is wise to looking into renting a safety deposit box from a bank. The
boxes come in a range of sizes and are relatively inexpensive but provide
the maximum amount of protection for items such as wills, house deeds
and precious jewelry (check out Fiscal Agents Safety Deposit Box Fee survey
Truthfully, good records can go a long way to simplifying
your life. They also provide the security and comfort of knowing that
your records will be left in perfect condition for your heirs. Each year
in Canada, large portions of estates go unclaimed due to lack of knowledge
of the existence of bank accounts, insurance policies and investments
(visit the Interweb section of our web site at www.fiscalagents.com/knowledge/interweb.shtml
for a link to the Foundmoney.com site). By organizing your records and
important papers, you can ensure that your heirs get everything they are
So now that you understand the importance of bringing
your records to order, how do you get started? Below is a quick general
guideline to follow on what to toss, what to keep, and where to keep it.
Home filing cabinet:
· Keep records of anything to be claimed on your
next income tax return. This may include receipts for charitable contributions,
prescriptions that you have not been reimbursed for, and receipts for
· You should hang onto your income tax returns
(and all relative receipts) for a minimum of seven years in Canada. This
will ensure that you have the necessary information available if you are
audited. Be aware however that the government can audit back even further
than seven years if they suspect fraud.*
· Retain your bank account statements for at
least one year but check them for accuracy when you receive them and correct
any errors promptly. Hold on to any receipts or cancelled cheques needed
to prove any tax deductions and keep receipts that prove the value of
home improvements or expensive household items (for insurance purposes).
Hang on to your deposit slips until the deposits are noted on your monthly
statement. Everything else can be discarded, including any cancelled cheques
that are not needed for the above reasons.
· Keep material related to your investments,
including all annual statements and prospectuses. For those with brokerage
accounts, keep all trade confirmations as well as the original brokerage
· Hold on to documents concerning your retirement
plan(s). This should include any annual statements and information on
the investments that you have chosen.*
· Pay stubs should be saved for the current year
until you receive the corresponding T-5(s) (for income tax). They can
be tossed after that.
· Other important documents and agreements, such
as car leases, loan agreements, and mortgage contracts, should be kept
in the filing cabinet for easy reference.*
· Keep auto and homeowner's insurance policies
along with any type of valid rental agreements. Old policies can be discarded
when the statute of limitations has expired.*
· Hang on to your credit card statements for
at least six months to be used as reference in the case of a dispute arising
over amounts paid. They can then be discarded. Also, be sure to keep the
original credit card lending agreement and review your credit card statements
for accuracy when you receive them.
· Booklets and information on employee benefit
plans and health and disability insurance should be kept. Be sure to include
information on what is covered in addition to who and where to call if
you have any questions.
· Include your power of attorney, which allows
another person to manage your affairs if you become incapacitated and
are unable to do so.*
· Your living will should also be included, which
allows another person to make medical decisions if you can not.*
· Your home safe should also contain instructions
on where to find the keys for your bank safety deposit box (if applicable).
Bank safety deposit box or fire/flood-proof home safe:
· Most importantly, include your will, trust
agreements and cemetery deed.*
· Documents proving marriage, divorce, birth,
death, adoption, military service, child custody, citizenship, education,
and technical or professional training should be kept here.*
· Keep policies for life insurance and make note
of any policies that your survivors might not think of, including accident
insurance if you charged a travel ticket to a credit card.*
· Include any deeds and titles, including those
· Proof of payment of debt or of money owed to
you should be kept in the safety deposit box. This will prove beneficial
if someone asks your survivors to pay off a debt again after your death
or tries to renege on a loan agreement.
· Keep all stocks, savings bonds and securities
* * *
||Use this link to load a printer-friendly
version of this document.
Have a question regarding this article? Use our feedback form to send us a note.
© , Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.