When a new year begins, are you thinking about how you're going to file your taxes in the spring? The holidays are winding down and it's most likely that folks are focusing their energy on new year's resolutions like getting in shape, eating healthy, and taking up a new hobby.
For those with debt and no plan for how to conquer it, make this the year you partner with a Licensed Insolvency Trustee (formerly known as a bankruptcy trustee) to discuss your financial options like filing a consumer proposal.
Make Taxes Easier
Tax season isn't here quite yet but it's on the horizon. If your tax preparation usually consists of sorting through crumpled-up receipts or searching endlessly for important documents that you swore were around here somewhere, then make this the year you start off right with organization in mind. For those readers who came here to get professional personal finance tips, you're in luck.
This article discusses how to structure your yearly financial record-keeping in such a way that you'll have everything in place and ready to go when next year's tax season comes around. There's no need to keep stacks of unopened bills and scattered documents, you can develop healthy financial habits with a little housekeeping and regular maintenance.
Set Up a Filing System
You need a dedicated place where you can keep your personal files. There are electronic options (we'll get to that later) to keep you on track throughout the year but you still are going to encounter your fair share of paper for bills, statements, records of purchase, or more.
Financial Record Categories
Set up a filing system with separate files for different subjects that you can easily tell apart. Your subjects are going to vary depending on your personal preferences, financial situation, and number of documents that you use, so use the following list as a guideline for your own organization system:
Auto: car title, maintenance record, insurance record.
Bank accounts: keep your monthly statements.
Bills due: when you open your bills, file the ones you have to pay to keep track.
Contracts: where you keep employment contracts.
Credit cards: your current statement and any statements with tax deductible purchases.
Employment: keep your paystubs, employee handbook, invoices (if a freelancer), and T4 slips.
Home: keep rent and mortgage records, receipts for home services/repairs.
Insurance: for the insurance policies you may have, a place to keep all the fine print.
Tax Records: here you can keep records of charitable contributions, and income tax summaries from previous years.
With a filing system in place, you can go forward into your year knowing that every financial document has its place.
Digital Files
Digital budgeting software and financial tracking apps can be a huge lifesaver for staying organized as well as achieving your long-term financial goals. For those who have made an arrangement with their creditors through a consumer proposal instead of filing bankruptcy, budgeting software can establish payment reminders and visualizations of your progress. Just be sure to back up your records on a USB or external hard drive so nothing goes missing.
