Being financially responsible is one of the biggest challenges we 20-somethings face. Whether it's another dinner out with the girls, a night at the movies with the man-friend or a day splurging on a new pair of sexy stilettos, it's not always easy to keep track of your purchases - especially when it comes to impulse buys (I'm looking at you, Target One Spot!). But with knowledge comes power, and the tips we have here will guide you on your way to being financially savvy. We talked to Mitchell D. Weiss, author of Life Happens (see giveaway at bottom of this post!) and an instructor in the Economics & Finance Department at University of Hartford, for his suggestions on what important documents you should keep, toss or shred.
1. Documents to keep for life. "Keep the documents that chronicle your life-birth certificate, social security card, passport, voter registration card, immunization records, education degrees, marriage certificate," Weiss tells us.
2. When to apply the Seven-Year Rule. "Keep your taxes for seven years," he explains. "Rarely does the IRS come knocking a month or two after you file your tax return." And the same rule applies to bank statements, credit card statements, and W-2s. "To the extent that you need your statements for tax purposes, copies should be retained for as long as you do your tax returns. Otherwise, a year or two is fine," he says. "As for pay stubs, I would retain them for a year."
3. Keep bills for comparison. "I recommend hanging on to these bills for at least 12 months so that I can compare my current charges to those from the year before. This will help you to protest-if not successfully roll back-the cable and cell phone rate increases that routinely occur," Weiss explains.
4. Contracts, leases and titles, oh my! "Keep deeds for at least as long as you own the property and probably for several years beyond that. Leases for as long as you're renting your house or apartment, and a year or two beyond that," he says. "Car titles and current registration certificate should be held onto for as long as you own your car. Same goes for the manuals and warranties. You'll turn over the title when you sell or trade your car."
5. Be careful when storing data online. "Except for the documents you'll keep for life, all of the rest can be optically imaged and stored on a hard drive. But take care to password-protect and encrypt all confidential data that is stored this way and also to cross-cut shred all paper files that contain the same level of confidential information," he says.
6. Know your numbers. "Your most important numbers are your Social Security Number, date of birth, Driver's License number, passport numbers, bank account and ATM, debit and credit card numbers," he says.
7. Health insurance documents. "Retain your insurance policies for the coverage year. And safeguard your health insurance card as you would your credit, ATM and debit cards," he says.
8. Protect your checks. "If someone takes a check from the middle of your book, makes it out to themselves and signs your name to it, their bank may very well cash that check and your bank will have no obligation to restore your account," he warns. "That's because it's your responsibility to keep your checks under lock and key. Shred unused checks and printed deposit slips."
WIN IT!
Mitchell D. Weiss has graciously offered to give copies of his e-book (your choice on format) to five lucky Life2PointOh readers. Seriously, Life Happens is a book every 20-something should be given when she's in college and living on her own for the first time. It covers everything from setting up your budget and building credit to paying those never-ending student loans and yes, even planning for your future retirement.
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