Creating a systemto organise yourfinancesThe TWO step approach to simple recordkeeping at home as well as the specific toolsand resources I recommend.

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The cost of financialdisorganisation

Creating a system for financialpaperwork

Deep Dive: A system for payinghousehold bills

Record Keeping for Tax Time

Tools & Resources

Your Action Plan

Table of Contents

If you’re anything like everyone else (so yes, that’s likely you), then you likely

have a pile of financial paperwork at home.

I understand & know that you are not alone!

That frustratingly large pile is not an uncommon phenomenon – especially for

time poor mums balancing work, business and running a household. You know

it’s there and you have a vague plan on how to tackle it at some undetermined

time in the future.

However, have you ever thought about what the financial cost of being

disorganised with your financial paperwork is? I’m not aware of any formal

The cost of financialdisorganisation

studies on the matter but let’s take a look at some possible examples:

Misplaced traffic & parking fines leading to penalties for late payments

Medical receipts that you have to claim with Medicare or your private health

insurer or even your travel insurer that you lose or forget to claim

Bills that aren’t paid on time leading to the loss of potential discounts for

paying on time as well as the likely overdue payment fees

Lost superannuation balances as you move jobs, move houses and simply

lose track of the details of accounts and forget you ever had them in the first

place

Cheques received in the mail that never get banked

Missed credit card statements that mean you pay your balance late –

incurring fees as well as losing the interest free period on any purchases until

the balance is cleared

Savings left sitting in bank accounts earning little to no interest

I think you get my point, the list can go on and on. But this state of

disorganisation is likely costing you money – not to mention the stress and worry

of its existence in the first place.

It’s true what they say, that “paying attention to your money pays off,” and

organising your finances and creating a system to keep your bills & paperwork

tidy has a number of advantages including:

less stress, because you can easily find what you are looking for;

helps you keep up to-do date with your household budget; and

generally gives you more time simply by following a system

The first step to get everything in order is to create a household filing system.

How to create a system that’s doable & efficient

The system I like to use has TWO steps. Just two steps keeps it practical and easy

to stick to which is exactly what time poor mums need.

Step 1 – Create an Action File

The Action File is a table top file for daily, short-term filing. Not everything can be

dealt with right away, that’s just life. Filing it away in your permanent filing

system means it will be forgotten, and leaving it on the dining room table is the

road back to clutter.

Don’t use a ring binder folder for this file – that encourages you to file things and

Creating a system forfinancial paperwork

put it away out of sight which is not the purpose of this file.

Instead, use either desk top in trays or a folio. Something that is small enough

but in view. It’s there because you have to ‘take action’ on its contents.

This is a great file for storing things like permission slips and activity forms for

the kids that need returning to day care, kindy or school and for unopened mail

of other family members.

You can use the action file to store bills that are due for payment, papers that

require response (signatures etc), and information (statements, insurance papers

etc) that must be filed – but only if it requires you to DO something with it.

Otherwise it goes straight into your permanent filing system.

To reiterate, it is a temporary file, for bills and other financial paperwork that is

yet to be addressed or is in the process of being addressed. It’s ‘in action’, and

not ready to be filed yet.

The advantages of the action file are that:

it remains visible and draws your attention to its contents daily

it is small which forces you to take action as its contents grow

it prevents you from forgetting paperwork you need to action that you may

have otherwise filed away

you can easily place your hands on the paperwork you are dealing with in the

present

Step 2 – Create a Filing System

This is your household's working file system. You may choose to keep it in a filing

cabinet or if you don’t have one of those, you could use a series of labelled ring

binders stored on shelves.

This is where you file paperwork that you need to keep a hard copy of; either as it

comes in (if there is nothing to be done) or once you have taken action on it

(from the action file).

If you are using a filing cabinet – you should create a separate file for each

household category. For example, you may have individual files created for:

health insurance & Medicare records,

your individual bank accounts & credit cards (or a combined file for all

depending on how many accounts you have)

rent receipts & mortgage paperwork,

house maintenance records

household insurances

vehicle insurances

life insurances & superannuation account statements

taxation

These are just suggestions - every household is different and you may like to

combine or split out further some of the above files to suit your family.

I prefer to organise your filing system by category rather than date. That way you

are able to see the history of a particular policy, account or statement by going

to the one folder. If your paperwork is organised by date – to do this you would

have to go through numerous folders to gather the information which is time

consuming.

I also have separate file or folder for all key financial & other important

documentation like:

a copy of your will, enduring power of attorney & / or guardianship

passports

birth certificates

marriage certificate

This way know exactly where they are at all times and can access them easily.

It may sound silly but if you have great files, folders and boxes for records, it’ll

make you feel more inclined to keep your organised way of life.

Household receipts

I also keep a plastic wallet at the front of my filing system for household receipts.

A plastic A4 wallet is great because it can be closed to secure the receipts yet it

will expand enough to fit a lot in.

I reserve this for significant or bigger ticket item purchases and I usually staple

to the receipt the relevant product warranty card. For example if we purchase a

new vacuum cleaner or kitchen appliance and need to keep a records of the

purchase for warranty purposes – I will store the receipt in this plastic wallet. I

would keep these receipts for the period of the warranty and then throw them

out.

Paying and filing bills in particular trips a lot of people up.

Some arrive in the mail to be paid, some are automatically deducted from your

bank account and you have to remember to download a copy of the invoice for

your records.

Receiving bills by mail is fast becoming a thing of the past and to be honest we

personally don’t receive a lot of bills in the mail at all.

Most of our bills are direct debited from account each month and I reconcile

them that way.

However, a lot of people are also still more comfortable receiving bills in hard

copy and physically paying the account themselves.

One account I do choose to continue to receive by mail is our credit card bill.

This way it always gets my timely attention and is paid well in advance of its due

date. Whilst I could get this account by email – there is the chance that I do not

see the email in my inbox and therefore forget to download and pay the account

through Netbank on time.

We also pay our power bill by mail as well.

Here is a step by step system for hard copy bills that arrive by snail mail.

For bills that arrive by mail

1. Once I’ve opened the bill, I would usually pay it straight away from funds I

have reserved for the account in our ‘Bills Account.’

2. I would then clip a printed copy of transfer / receipt for payment to the bill,

stamp it as ‘PAID’ and file it away into the relevant file or folder in my filing

system as there is no further action to take.

Deep Dive: A system forpaying household bills

3. If it was unable to be paid straight away for whatever reason or it was not due

for some time (like the credit card bill for example) I would file it into my

Action file and attend to it from there at a later date

4. At the beginning of each week I sort through the action file to see what bills

need to be paid and pay them.

5. Once paid from the action file I would file it away with a copy of the receipt

into its relevant file or folder in my filing system

For bills that are direct debited from an account or credit card

1. I have a monthly “bill sheet” set up for all the household bills that we pay via

direct debit. I only set this up for our fixed expenses like health insurance,

household and car insurances for example.

2. It is simply an A4 page that summarises which accounts are paid this way. It

tells me what bill (e.g. phone, health insurance etc), the date it is deducted

(e.g. 14th of the month), for how much and from what account (e.g. credit card

or bank account).

3. At the end of each month, I use this list to go through the relevant accounts to

reconcile the deductions. This way I pick up if there is any overcharges,

duplicate charges or other issues.

4. If I am sent a corresponding invoice / tax receipt for our records, I save a copy

of the invoice on the computer under a Household Bills – and then a sub

folder for the respective bill (e.g. Household Bills – Phone)

5. I usually rename it to help me easily identify what period it relates to (e.g.

June 2016).

6. Usually these invoice / receipts are also stored in your online account with

the service provider or insurer so you can access them that way to download

if you haven’t received or as a duplicate record.

Tax Time Tips for busy mums

Pre lodgement

Keeping tidy tax records is important and a real struggle for most us.

During the year you will receive paperwork that is important for doing & lodging

your tax return. Your employer & financial institutions will send you documents

like pay slips, payment summaries, receipts, interest & dividend statements as

well as private health cover summary.

If you own investment property, you need to keep all records associated with the

acquisition and disposal of that asset and expenses & income in relation to that

asset for tax purposes.

If you receive any parenting payments or allowances you will also be sent details

of these from the Government or Department of Human services. Alternatively

you can download these statements from your online account if you are

registered for online services.

If you are self-employed or run a small business as many mumpreneurs do – you

will likely have all this as well as financial paperwork that relates to the business;

like expense receipts, invoices and contracts some common examples.

It is simpler to have a separate file for personal tax and business tax – for

records keeping purposes. This ensures you are able to clearly distinguish

between personal & business expenses.

Having a good paper trail eases the process of preparing and lodging your tax

return, and means not missing out on deductions or entitlements because your

receipts were thrown out during a handbag or wallet clean out.

If you want to make tax time easier, keep a summary of information in a

spreadsheet or notebook that you update once a month or see below for a list of

Record Keeping for Tax Time

online tools and apps that can assist your record keeping throughout the year.

Post lodgement record keeping

The tax office is able to request evidence of any information or entitlements /

deductions you provided or claimed in your tax return.

Once you return is prepared and lodged, the ATO requires you to keep all your

written evidence of a period of 5 years which is calculated based on the date you

lodge your return.

So it’s the lodgement date that counts here, not the date on the receipt. Some

expenses are claimed almost 12 months after the date they were incurred and

going by the date on those individuals receipts will see you fall short of your

obligations, which is why she recommends people keep tax records for seven

years to be safe.

According to the ATO, records you need to keep include:

payment summaries from payers, including your employer and the

Department of Human Services

statements from your bank and other financial institution showing the

interest you've earned

dividend statements from companies

summaries from managed investment funds

receipts or invoices for equipment or asset purchases and sales

receipts or invoices for expense claims and repairs

contracts

tenant and rental records

You can visit the ATO website here for a more detailed explanation.

There are a million and one tools out there designed to make your financial lifeeasier. The fact that we have so much choice however, is actually what holdsmost people back from taking action.

Here are some great tools that I find are easy to use, do what they aresupposed to and most importantly, don't take a PhD to work out how to use!!

Password manager

If you do opt to receive your bills online – you likely have to access the invoice

through your individual account with your bank or service provider. This means

that for every bank and service provider you have a different login and password

combination.

I think you already know how frustrating this is and in most cases trying to log

into Medicare you end up simply re setting your password because you’ve

forgotten it and can’t be bothered to wait on the phone with them to find out

what it is.

The solution to this problem which is also a HUGE time saver is – Dashlane.

Dashlane is a password protection app – a place to organise and store all your

passwords in one secure place that you can access by remembering just ONE

password. You can access it anytime on any device, mobile, iPad or desktop

computer.

Every time you create a new password or new account it can automatically save

that new password and account details to your Dashlane account so that you will

never have to remember it again.

Budget & Cashflow

Once you have your budget set up in order to stick with it – there is some

ongoing cashflow management required. You need to track your expenditure to

Tools & Resources

ensure it is in line with your budgeted expenditure.

There are numerous ways you can do this and with numerous tools.

The one I recommend is Money Brilliant.

Household insurances - Trov

This app builds an inventory of everything you own; a database of important

information about your belongings from your kettle to your car.

You can then quickly access details about your things when you need them -

which is particularly important in the event of an insurance claim.

You simply take pictures of your possessions with your phone, name and

describe them, enter the serial number off the item and make and model (where

applicable) and categorise them. You can also enter all the purchase details or

photograph the receipt.

Tax Time Tools

Employed mums – tracking deductions

Save time and keep your tax organised with the ATO app's myDeductions tool.This tool is for individuals claiming work related expenses as an employee only.

It’s not for small business owners (see below for tools specific for that).

You can record the following kinds of expenses within this app:

work-related car expenses

work-related travel expenses

work-related clothing, laundry and dry-cleaning expense

work-related self-education expenses

other work-related expenses

gifts and donations

costs of managing tax affairs

Perhaps the best feature is for tracking car trips & creating logs – if you claim car

related expenses.

The myDeductions tool makes it easier and more convenient for you to keep your

deductions all in one place.

For Biz Mums – tracking expenses

Check out Receipt Bank, for a great scan and save online system that will help

you avoid plenty of effort and pain come tax time.

Receipt Bank extracts the key information from your bills, receipts and invoices,

removing the need for manual data entry. It can then publish the data to your

accounting software or it can be downloaded as a spreadsheet or used to create

expense reports.

It also integrates seamlessly with Xero which is why I personally love it.

For another option you can also use Shoe Boxed.

If you are looking for the cheapest option – you can keep manual records in a

spreadsheet for no cost to you (except your time). If you have only a few receipts

a month then this may be the best approach to start out with.

The most important thing is to take action. Disorganisation won't resolve itselfand as you now know - it's costing you money.

Being organised is essentially a habit. So pick one thing and start doing it daily.You won't have the perfect system set up from day one - but you will find itevolves into what works for you over time.

Here are some useful steps for putting this all into action.

Creating a system - Your Action Plan

Do a purge and prune once a year. What you needed to have two years ago

may no longer be relevant.

Maintain a hard and soft copy record for risk management

Ensure you keep addresses up to date with institutions – that way there is less

chance of losing track of your financial affairs as you move on in life.

Keep your will, financial plans and copies of your investments in one place

Continue to get your credit card statement in the mail.

Buy folders and make the time

There is never going to be a good time and to be frank the first tidy up is

going to hurt

Start out small and break the jobs up over several days or weeks

Create small tasks like sorting this pile of receipts then move into sorting

them into months, checking bank statements, filing mortgage papers and

creating a portfolio of insurance policies.

If may sound silly but if you have great files, folders and boxes for records, it’ll

make you feel more inclined to keep your organised way of life.

It’ll also help you keep to a regular schedule of reviewing what you have

identified is necessary to stay on track.

Your Action Plan