It is the dreaded time of year….. getting documents together for your annual tax return! How do you keep your records? Where do you start?

  • In a shoe box?
  • In files that are scattered?
  • In a check register?
  • On a hand-written spreadsheet?
  • From paper bank statements?

It is hard to break old habits. If you have a system, you just don’t want to think about changing it. There are easier ways but it takes a new mindset to start new habits.

First of all, if you break it up and handle your financial transactions weekly, it will only take about an hour each week once set up. The beauty of this system is that at the end of the year, you print a report and it is done. Everything you need is in front of you on paper. Your accountant will love you! You can even try to handle preparing them yourself if you feel confident. I suggest doing this at least once if your return is not too complicated.

Here are my suggestions to get started on the road to less stress at tax time:

  • Create a file titled Taxes for Year _________ and everything that comes to you for taxes can be put in this file during the year. Think donation receipts, car registration bills, property tax statements, insurance dividend statements, etc. That way you don’t have to worry that they will get lost. That file can be used once your tax return is done. Not only keep the tax return in it but all the supporting documents.
  • The unknown is worse than reality. Guessing at what your income minus expenses is at the end of every month creates a nagging “homework” feeling. I suggest financial software that organizes your spending into categories — I use Quicken and it is simple. Once you identify a certain income or expense in a category, it remembers each time you enter that same vendor. It also allows you to separate your business expenses from your personal.
  • Enter transactions once a week from your check register or online banking account. It becomes easier as time goes on. Make a date with yourself on a certain day and time and put it on your calendar. You will not only be ready for tax time but you will be more honest with yourself about where you stand financially. You can make adjustments in your spending. If you spent too much one week on eating out, the next week you can challenge yourself to cook at home. A budget is a must for everyone. I firmly believe in using what you have and taking some time to pause and think before buying anything new. Our landfills and oceans are overflowing with unwanted stuff.
  • Go Paperless! This will save you so much time when you need to shred old paperwork. You can use a smaller filing cabinet. Don’t be afraid to change. Records are kept online for years for you to review. Online banking is your friend. Waiting 30 days for a paper statement to review your spending is too long in this world of instant access. Banks usually monitor your unusual spending but reviewing once a week can give you peace of mind. I create online accounts for everything including utilities and insurance. I can quickly spot a problem and remedy it immediately.

I know that your brain is on overload and it sounds easier to just keep doing what you have been doing. Old comfort zones are hard to change. I know for sure, though, that keeping track of your financial life on a weekly basis is essential to creating an organized world.

Once you know your finances, you will understand where your spending is out of hand. You will clean out your closet with a renewed excitement to see what you have and what you absolutely don’t need. Your pantry will take on a new importance because you are no longer shoving things toward the back never to be seen again. Challenge yourself to use the food you have for a new meal created by you. Come home before you buy new clothes and think about what you really need. Even I have clothes in my closet with tags on them. They are usually the ones that I never bothered to try on before purchase — or I was hoping I could fit in that size!

I can help — but my real goal is to teach you to do this yourself. The satisfaction in learning something new, tackling the computer, understanding the paperless world and knowing what you have is essential to making time for your goals and adventures. If you are interested in taking a class with me, just reach out here. You can do this!