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how to make a home finance file

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

Do you remember what a pain it was to locate all your old pay stubs last time you had to file something for bituach leumi?  What about the last time you had to find your rental contract to settle a dispute?  And when’s the last time you even looked at your bank statement?

When it comes to money, organization is a tremendous time and money saver.  Organizing your financial documents is important because (1) it makes it easier to find what you need when you need it, (2) it enables you to review and improve your finances on a regular basis and (3) it allows you to find money that is being stolen from you every month through shitat matzliach.

And if that isn’t enough to encourage you, by law, you are required to have 7 years worth of financial documents on file for an audit.  And since the folks over at mas hachnasa can come after you for pretty much any stupid reason,  you may as well be prepared.

So, how do you organize a money folder?  Here is a simple 3 step process:

 

Step 1:  Get some supplies:

A binder, a hole puncher, dividers, and some sheet protectors

 

Step 2:  Divide your money folder into the following five sections:

1 – Pay slips

2 – Bank statements

3 – Investments

4 – Payments

5 – Contracts, policies and communications

 

Step 3: Review you financial paperwork and load it into each section

1 – Pay slips.  Every month you need to receive, check, and store your pay slips.  Upon receiving your pay slip, use the tax calculator to make sure the proper taxes were taken off. If something is incorrect, contact your company’s HR person and find out if you are misunderstanding something or if there is an error.  Once you approve the pay slip, put it into your binder for storage.  I put each year’s pay slips into a different sheet protector, with my 106 on top of each pile

2 – Bank statements.  I don’t advocate keeping every piece of paper written to you by the bank; only the important ones.  Once a month I set a day to print the list of transactions from my bank’s websites and check off each one as I approve it.  If there is a transaction that I don’t recognize (usually a bank fee) then I contact the bank and ask for my money back.  Also, your credit card deducts from your bank once a month, so in order to approve the transaction where money goes to your credit card, you need to review your credit card statement.  The sleazy guys at my bank moved the bank fees they were not supposed to charge me onto my credit card, hoping I would not find it.  Look for these as well as any other charges you do not recognize and either confirm that the statement is correct or fight the charge.

3 – Investments.  In this part of your binder, you should store any material relevant to your keren pensia and, if applicable, keren hishtalmut.  This includes any letters you are sent, quarterly reviews and payment notices.  Make sure to make sure you understand every piece of paper as you put it in.  If you don’t, call the company and have someone explain it to you.  Don’t be embarrassed; it’s your money and you have every right to know what they are doing with it; that’s why you are paying them a management fee.  Also, as times goes on, it will become easier to read these statements without any assistance.

4 – Payments.  Include any payments that you have paid to anyone who can hunt you down and demand payment again.  This includes rent, mortgage, arnona, electricity, mas hachnasa and bituach leumi.  Receipts for household items with a warranty will be kept in the final section…

5 – Contracts, policies and communications.  In this section you should include your rental agreements, insurance policy, work contracts, communications with bituach leumi and mas hachnasa, warranties on your electronics and any other relevant paperwork.  Of course, if a particular contract or policy is too big, it may merit its own binder.

If you’re like me, although you know you have hundreds of papers lying somewhere, you can currently locate only two relevant sheets of paper.  That is fine; just start and other papers will turn up.  In the meantime,  pray to God that you will not be hit with an audit any time in the next seven years.


1 Comment

  1. Yitzchok says:

    Great post!
    A couple of tips I would add from personal experience:
    * Use lever-arch files (the ones with tall pins and a lever) not regular ring-binders – the latter hold too little and pop open too easily
    * In general, once you have made the major divisions and separated things into different files, don’t bother trying to file by what the thing is, just file by date, piling the newest papers on top. That is to say if all your utility bills are in one file, do NOT keep all the electricity bills together in order and then the arnona bills in order. You will go crazy with that filing. (If you want to make sure that nothing got skipped and you’ll make the effort to check each time you file, you *might* be prepared to file that way, but I still think it might be easier to file the new one on top and look back a bit in the same folder to check that the previous document you have is the previous one which was issued.)

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