Have you ever spent hours tearing your house apart trying to find a receipt, form, or slip of paper? Chances are you need that piece of paper to do your taxes, to submit a health claim, or for a work reimbursement. Many people miss out on the opportunity to get money back when they discard their receipts, or don’t keep good financial records. It is possible, however, to actually save money when you develop a well-organized system for sorting and collecting financial records together.
The best way to save receipts, statements, and sales slips is by purchasing a large accordion-style file folder. There are a ton of different styles on Amazon.com. They are generally made from cardboard and may have alphabetical letters in each tabbed slot inside, or you may be able to make your own with labels. There is a lid that folds back down and secures to the file container when not in use. There come in different thicknesses, depending on whether you’re collecting personal financial records, or for a business. These folders are around $10-$30, making them a worthwhile investment for when you don’t have a lot of space to store items at home.
You may wish to file papers alphabetically, such as “P” for pension plan, or “S” for school loan. Or, you may wish to create your own labels and stick them to each tab in your file. For example, “Bank”, “Income Tax”, “Insurance”, etc.
Each time you receive a receipt, invoice, misc. slip of paper or statement as you go about your daily life, place it in your bag, backpack, or purse. Later, you can put it into your file folder. It’s best to develop a ‘system’ or habit of doing this the same way each time.
As an example, do it the same day each week or every time you clean out your wallet. Developing a system is one of the most powerful financial habits ever.
Don’t ever discount those slips of paper. You never know when they may come in handy. A store receipt may come in handy if you’ve purchased a product, but it ends up being faulty. Without the receipt you won’t be able to return it. You’ve now lost money because you’ll have to fork over cash for a new one.
A receipt for school books or a seminar may be used as a deduction on your income taxes. Don’t get caught up in the bustle of the moment. When you’re handed a slip of paper, tuck it away and take care of it later.
Income taxes can be extremely complicated. As you work through them each year, you may realize that you could claim more tax breaks, if only you had kept the receipts. This is where your file folder and filing system will come in handy for the future. You’ll have all receipts right at your fingertips, and you’ll never miss out on a deduction ever again.
Do you ever buy supplies for work and then they reimburse you for them? Have you ever lost receipts, and then lost out on reimbursement? That will never happen again once you have your records conveniently stowed away.
You’ll not only save money by storing receipts that could potentially be a tax deduction, or work expense, but you’ll also save time. All your financial records will be conveniently stowed safely in one place.
A note about electronic filing systems that let you scan receipts and important papers and then ‘throw’ away the original. Don’t do it. What would happen if you scan hundreds of receipts and other bits of information over several years and then your computer dies? Just something to think about before you invest your time and energy into yet another device that requires you to sit in front of your computer more.
Favorite Receipt Tips:
Receipt Tip #1: As you probably have already discovered, many types of ink on receipts fade over time. Simply write over the information that is there in pen before you file it and the information will always be there.
Receipt Tip #2: For expenses like meals and taking clients out to dinner and such which is called Entertainment, it’s critical that you write who you went out to dinner with on the top or back of the receipt and what you talked about during the meeting. If you are ever audited, the auditor is going to look for this information.
Receipt Tip #3: This tip is especially important to you shoppers out there (and you know who you are). When you buy a piece of clothing, shoes, purse, etc. and you’re not going to wear it the next day, leave the tags on the item or in the box along with the original receipt. If you find that you haven’t worn or used the item in a few months, even though you might not be able to return it for cash, you may be able to return it for credit and get something you might actually wear!
Receipt Tip #4: One of our favorite saying at Creative Wealth is “How you do anything is how you do everything.” It’s a quote by Cheri Huber and this is only one of the thousands of applications of the quote. I had a friend whose business was audited years ago. The original audit period spanned three years but after looking at all of my friend’s receipts and systems for the first year, he told my friend he didn’t need to do the remaining two years. Why? Because it was obvious that he had a very tight system in place and that he was sure that the rest of the years were in order as well.
OK, now it’s your turn to get your system on!