How to Manage Your Financial Documents

According to the Central Finance Ministry our Post Offices hold billions of unclaimed National Saving Certificates & Post Office Saving Bank Accounts. Do you think people don’t want their money? This is because they have lost the document which will remind them that they have money invested. And may be its not their fault also as the original investor did not record it properly and family is not aware of investment. So it is important to file, record and safe keep financial documents as the consequences are inter-generational.

How to Manage Your Financial Documents

Normal Process

This is how most people do – We receive a document through post, we put it on our writing table or worst in the wardrobe and, then forget about it. Actually what happens is that, when we received a document  we think the purpose of reminding a payment or a due is done and you create a mental note of last date or actionable. But it is human tendency to forget as human memory has a non-automatic RAM in place. This is the reason I have seen many of my friends who often forget to deposit their mobile bill because they have not filed it properly or people asking you to pay some bill online as cash and cheque will not be accepted beyond a mentioned date.

Every household must work out their own document management system, but there are some general guidelines which can help you a lot in a long way. The aim of creating a system will be:

1)      Ease the process of finding and saving cost on penalties and late payments.

2)      Safe guarding documents from wear and tear, misplacing and accidents like thefts.

3)      Assist your financial planner in locating required documents and pass on the relevant to survivors in case of any mishappening.

Solution

It is useful to keep the important document in order in all financial consequences. Most financial experts recommend a creation of comprehensive folder of documents that access by family members easily in case of emergency. Otherwise they have to search here and there at home and run desperately to banks and life insurance companies. It is advised to use the colors to show the importance of the documents. For an example, Red for the most valuable files, Blue for the less and so on.

Do not hold too many documents

Sometimes people hold so many documents that there family members can’t find the important ones easily. So instead of filing all statements of the same folio of a mutual fund investment, only file the latest one. File the latest in case the details are available online. For example Life Insurance receipts, utility bills, stock transaction statements, bank statements etc. are all available online either by signing up or by mail back request. So what’s the point in preparing bulky files?

Managing Passwords

Managing documents online is also not easy as these come only when you create accounts/logins by choosing IDs and passwords… You have to remember multiple passwords of your online accounts and then you have to keep changing them for security reasons. And if you lose a password, it is equally tough to reset a password after going through a stressful process of validation and answering secured questions. It is advisable to maintain an excel file containing your IDs and passwords. (may be 2 separate files one for login another for password) Some precautions to be maintained here. The file has to be password protected – only you and spouse should know the password. The file should be used only on personal machines (not office systems or cybercafés). Keep a backup of this file preferably on a personal external drives and never put this file on mails or web. Also do not put details of your credit card passwords or CVV numbers. In case you are putting material information, put in a riddle format that only you know.

Important Financial Documents

Below mentioned is the list of important documents that you need to check and keep them ready. You should collect all these documents as soon as possible if not in possession and update them every few years as per your need.

Documents related to Asset and Liabilities

One should keep arranging all the documents related to property & land, any document related to plot, share certificates, registration certificates of vehicles and copy of fixed deposits. If your family members have no information about these than in an emergency situation they can never find them on time. If you have lent money in the market and if you have a loan from the market, keep a proper document related to both so that it can be included in your asset & liabilities.

Bank Account Statement

If you are active online no need to keep record, otherwise statements not more than 6 months are to be kept. Shred the old statements and after checking their accuracy. Do file important documents related to nominations made or changed. Cheques books need to be kept in a proper lock.

Income Tax Return

If you are employed somewhere or you are running your own business, you need to document your return very carefully. You can safe keep soft copies if you are filing it online. Whenever you require a bank loan the financial institution will ask for income tax return. Ideally if salaried you should keep copies of last 3 years income tax return all the time and 6 years if in business.

Insurance Policies

Again, if you have online account, you need not to file premium receipts. Just file the policy certificates. Private insurers also provide a copy of your proposal form. This should also be filed as it becomes an important document if the claim falls into dispute. The photo ID cards issued by insurers should be at a place where all mature family members are aware and have access.

Will

You should keep your will in a place where your family members can find it easily when required. A will is the most important financial document so you should keep it very carefully so that nobody can misuse – otherwise it can create a big mess. You can keep it safely in a bank account locker or a safe deposit box with sharing its combination with other family members so that they can use it when required.

The documents which we have mentioned above are very important hence be prudent in filing them. What else?

Scanning documents

Few documents which are used frequently can be scanned so that original is not disturbed. These can be your pan card, passport, and aaadhar card which are required as identity and address proofs while making financial decisions. So scan documents that are frequently required or keep adequate photocopies.

So I hope that after reading the article you have an idea how to record and file these important financial documents. Do share how you have been doing it? Also share any experiences where absence or presence of filing and proper safekeeping of the documents led to crises or a relief. Waiting for your comments.

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{ 32 comments… add one }
  • Vaishali Amin June 6, 2013, 12:14 PM

    Hemant, As always, a very useful post.

    Keeping scanned copy of passport/adhar card/pan card is a good idea.

    & Yes, while financial documents are to be maitained properly,
    information of the same to the family members is also very important.

    I have filed all my investment (MF/Insurance) docs in two files and have prepared a statement in excel for the above investments with maturity dates and approx values. and shared this statement and file with my husband and daughter.

    Thanks,

    Vaishali

    • Hemant Beniwal June 7, 2013, 8:07 AM

      Hi Vaishali,
      Good to know that you are already doing this but I have seen most of people ignore such important thing. Finance world has totally changed, now things are 10x complex in comparison to 2000. Maintaining documents is a must to avoid rude shocks.

  • Shib June 6, 2013, 1:05 PM

    I scan my imp docs and investments and upload them to google docs or google drive. Also, since I have a gmail account, it lets me directly upload the account statements, pdf or doc files directly into google docs. Then I (read-only) share that folder with my spouse and a close relative so that they can refer to those docs in case of any emergency.
    To keep track of recurring events, like premium payments, check mutual fund earnings, I do set a recurring event in the Google Calendar, very handy and very useful !!

    • Hemant Beniwal June 7, 2013, 8:15 AM

      Hi Shib,
      Thanks for sharing… Even I maintain 1 copy on cloud but I am not sure about security. That’s the reason I have not shared it.

      • Shib June 7, 2013, 12:20 PM

        Security is a relative term which is debatable… many websites/applications are already on the cloud, even your email data may be on the cloud. Physical security of the documents is also not guaranteed as pointed out by Indrajeet below. The chances of your docs surviving a disaster is much higher if it is on the cloud.
        Recently, I came across a free service offered by ICICI, called e-locker, which provides you facility to keep your documents safe, more here… http://www.icicibank.com/online-demo/e-locker.html

        • m.c.khandelwal June 14, 2013, 9:08 PM

          it is advisable to keep he original copies of investment documents in a brief case of reasonable size and inform to family members to open the briefcase in emergency situation.

      • Vinay Ketkar November 6, 2013, 1:37 PM

        I got to know of your web site through Maharashtra Times news paper. I found the site quite useful and well formatted. I store my imported documents on the cloud and has following comment to make:
        Offloading important scanned documents to cloud is a very good idea because such documents then are available to you any where as long as you have net connectivity. Security of such document can be achieved by encrypting them prior to uploading. There are a no. of free encryption soft wares available which can effectively to the job. One such tool is Axcrypt available at http://www.axantum.com. I use this tool to encrypt my documents on cloud and found it quite satisfactory.

  • Ankush More June 6, 2013, 1:08 PM

    Dear Sir,

    It is very usefull detail for safe futrue.

    Regards
    Ankush

  • Hitesh June 6, 2013, 2:58 PM

    Dear Hemant,

    A very useful post.
    I will share my experience.
    Recently my father was admitted for his diabetic surgery and he was supposed to be discharged in 2-3 days after surgery.
    Now when applied for cashless claims with the health insurer, there was a query raised from them to produce the copies of insurance of my father atleast for last 4 yrs to prove that policy is continuous.
    Now since i had maintained the copies in a file , i send it across the next day and thus was granted cashless claim before the discharge.
    On the other hand if i had not maintained the docs and would have taken more time to search or get the duplicate copy then the i would have to make the full payment during discharge .

    So filing documents saved me a lot.

    Regards,

    Hitesh

    • Hemant Beniwal June 7, 2013, 8:19 AM

      Hi Hitesh,
      Thanks for this input… I think this will inspire other readers to think seriously about importance of proper document management.

  • Indrajeet Singh June 6, 2013, 3:53 PM

    Hi Hemant
    Again a good article as usual. People do know importance of documentation, but they give least importance in doing so.
    I would like to share one thing that Important documents should be kept at two different places, may be one at home or one at office or with a trustworthy friend or relative. Because in case of theft/fire/earthquake/flood one can loose important documents & even the pocicy no or other details will be lost. Additionaly one can make an excel sheet & attach it to an email, so that it can be opened up afterwards.
    You are doing a fantastic job. Keep it up.
    Thanks & regards
    Indrajeet Singh- Ghaziabad

    • Vikas September 22, 2013, 12:43 PM

      Thanks Indrajeet and your suggestions are really helpful for the readers.

  • Rachappa June 7, 2013, 11:42 AM

    Nice Article on the importance of Financial document management.I think we should start saving your articles as soft copies-A knowledge bank for the future generations

    Finance documents and your articles as knowledge -Both are important

    Thank a ton for your fantastic articles..Keep going!!

    • Vikas September 22, 2013, 12:47 PM

      Thanks Rachappa and feel good that our articles are helping our readers a lot.

  • rajiv June 7, 2013, 9:51 PM

    for someone who is not tech savvy like me i would advice this which i do
    1. for insurance premium have a small chart in purse when to pay premium having following column
    policynumber- maturity- premiu amount-month eg-jan june
    2 for all ur fixed deposit have a dairy at home-which is based on maturity year wise having following details
    name of bank/institution-folio number-name of holder-date of deposit-amount principal-date of maturity-rate of interest amount at maturity-any other comment if any
    3 same maintain dairy for mutual fund having name/indivisual person wise details
    name of mutual fund/date of deposit/folio number/amount/scheme/other details

    • Sushila June 27, 2013, 3:47 PM

      Be wary of keeping documents in your purse.

      I know a case where the lady panicked when her purse was robbed, she had both the house keys and the documents having residential address in her purse.

      • Vikas September 22, 2013, 12:48 PM

        Hi Rajiv,

        Agree with Sushila.

        More than purse your bank locker may be a good idea to keep all your important documents. 🙂

  • Shirish June 7, 2013, 10:17 PM

    Hi Hemant,
    I think keeping the will in the bank safety deposit locker is NOT a good idea. Many banks do not have nomination facility for bank locker. In case of sudden demise of a person, the locker can’t be opened by his family members without the proper legal process to prove that they are legal heirs or rightful owners as per the person’s will ( which in turn may require a will).

    • Sushila June 27, 2013, 3:49 PM

      Better to leave a copy with the executors

  • Chetan Ambi June 9, 2013, 8:04 AM

    Nice article Hemanth!!. I am already maintaining a excel sheet containing all my MF investments, Insurance, Real estate and other investments like savings bank account. I even mentioned username and passwords in the sheet in riddle format. Only me and to whom I am sharing the excel sheet knows the password and excel sheet is itself password protected.

    But I need to maintain scanned copy important documents as early as possible which I am missing.

    • Vikas September 22, 2013, 12:57 PM

      Hi Chetan,

      Its good that you are maintaining records. a suggestion have a back up if excel is the only tool you are using.

  • Phani June 9, 2013, 11:21 AM

    Thank you Hemanth for your useful article. Thank you.

  • Subhash June 12, 2013, 2:31 PM

    Hi Hemant,

    Nice Article. Please issue an article on Will vs Nomination with case example.

    Thank you……………

    • Vikas September 22, 2013, 12:58 PM

      Hi Subhash,

      Will surely consider the topic in our future articles.

  • anil koul June 12, 2013, 8:15 PM

    Hemant-jee,Congrautions for yet again writing on most important topic-i too was mismanaged in document management till i subscribed to perfios.com under platinum category-now all my important document(unlimited) are uploaded in the software & hard copies are kept in bank-locker which fortunately is few steps away from my home.all the documents are accessible any time anywhere besides all my daily financial transactions gets updated with a single click of mouse on daily basis. indeed it has made my life simple & regarding security concerns -i had been told that all password are stored in my personnel machine & activation of sms alerts for every transaction is second layer of security.

    • Vikas September 22, 2013, 1:01 PM

      Hi Anil,

      Nice to hear you are making the best use of money management tools available.

  • Hitesh Thakkar June 23, 2013, 3:23 AM

    I have maintained diffrent files for diffrent docs. home loan docs, insurance docs and given title name on that file and keep them in my wardrobe ……..Simply use such stationary files and file ur docs properly.

  • Annapurna June 26, 2013, 8:48 AM

    Very useful…most of us spend a lot of time and effort in researching investment options to maximise our returns, but seldom give much importance to filing/safekeeping/maintenance of the documents that follow the investment!

  • Soni June 28, 2013, 9:57 AM

    Awesome Article – thanks for sharing.

  • Kamlesh January 31, 2015, 5:06 PM

    Dear Sir,
    Today morning, I randomly stumbled upon your website while searching for Health Insurance. I spent the next 3-4 hours going through your articles and content, and found it really useful and informative.
    Keep it going sir.
    Regards,
    Kamlesh

  • CA Karan Batra May 12, 2016, 2:22 PM

    Useful and very well researched article…

    Another good way of managing all your Financial Documents is the DigiLocker which was launched by the Narendra Modi Govt last year and is gaining popularity very quickly…

    The best part about this DigiLocker is that it offers more security than Google Drive or Dropbox.. Every time somebody tries to access this Locker, an OTP would be sent to the mobile of the user .. This OTP layer is over and above the Username and Password layer which the user will have to provide.. This OTP thereby provides double security..

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